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DIRECTORS
REPORT
AND
ACCOUNTS
3 O th A P R I L
2 O 2 3
INDEX
1
Notice of Annual General Meeting
2
Notes to Notice of Annual General Meeting
GROUP STRATEGIC REPORT
3
Chairman’s Statement
7
Summary of Consolidated Statement of Profit or Loss
8
Objectives, Strategy and Business Model
13
Principal Risks and Uncertainties
15
Corporate Social Responsibility
DIRECTORS’ REPORTS
22
Report of the Directors
25
Corporate Governance Report
28
Audit Committee Report
32
Directors’ Remuneration Policy and Report
39
Statement of Directors’ responsibilities in respect of the
Annual Report and the Financial Statements
AUDITOR’S REPORT
40
Independent Auditor’s Report to the Members of Goodwin PLC
FINANCIAL STATEMENTS
48
Consolidated Statement of Profit or Loss
49
Consolidated Statement of Comprehensive Income
50
Consolidated Statement of Changes in Equity
52
Consolidated Balance Sheet
53
Consolidated Statement of Cash Flows
54
Notes to the Financial Statements
92
Company Balance Sheet
93
Company Statement of Changes in Equity
94
Notes to the Company Financial Statements
104
Alternative Performance Measures
105
FIVE YEAR FINANCIAL SUMMARY
FINANCIAL HIGHLIGHTS
Accounting policies
54
Estimates and judgements
61
Revenue
65
Alternative performance measures
104
Finance costs (net)
68
Right-of-use assets
71
Borrowings
77
Financial risk management
81
Subsequent events
90
Capital and reserves
81
Guarantees and contingencies
90
Segmental information
63
Capital commitments
90
Intangible assets
75
Staff numbers and costs
67
Cash and cash equivalents
77
Interest rate swap
86
Taxation
68
Company statements
92
Investments in subsidiaries
72
Trade and other
Deferred tax
80
Inventories
76
receivables
77
Trade and other
Dividend and capital
Property, plant and equipment
70
liabilities
79
expenditure policy
12
Provisions
79
Earnings per share
69
Related parties
90
GOODWIN PLC
www.goodwin.co.uk
Registered in England and Wales, Number 305907
Established 1883
Directors:
T. J. W. Goodwin
M. S. Goodwin
S. R. Goodwin
(Chairman)
(Managing Director)
(Managing Director)
Mechanical
Refractory
Engineering Division
Engineering Division
N. Brown
B. R. E. Goodwin
J. E. Kelly
(Non-Executive Director)
Secretary and registered office:
Registrar and share transfer office:
Mrs. J. L. Martin, L.L.B., A.C.I.S.
Computershare Investor Services PLC,
Ivy House Foundry, Hanley,
The Pavilions, Bridgwater Road,
Stoke-on-Trent, ST1 3NR
Bristol, BS99 6ZZ
Auditor:
RSM UK Audit LLP,
Festival Way, Festival Park, Stoke-on-Trent, ST1 5BB
NOTICE IS HEREBY GIVEN that the EIGHTY- EIGHTH ANNUAL GENERAL MEETING of the
Company will be held at 10.30am on Friday, 29th September, 2023 at Crewe Hall, Weston Road,
Crewe, Cheshire CW1 6UZ for the purpose of considering and, if thought fit, passing the following
resolutions which are proposed as ordinary resolutions.
1.
To receive the Directors’ Reports and the audited financial statements for the year ended
30th April, 2023.
2.
To approve the payment of the proposed ordinary dividend on the ordinary shares.
3.
To approve the Directors' Remuneration Report (excluding the Directors’ Remuneration
Policy) for the year ended 30th April, 2023, as stated on pages 34 to 38 of the Directors'
Report.
4.
To re-appoint RSM UK Audit LLP as auditor and to authorise the Directors to determine
their remuneration.
By Order of the Board
J. L. Martin
Secretary
Registered Office:
Ivy House Foundry,
Hanley, Stoke-on-Trent
7th August, 2023
1
NOTES TO NOTICE OF ANNUAL GENERAL MEETING:
1.
Members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf
at the meeting. A shareholder may appoint more than one proxy in relation to the Annual General Meeting provided that
each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy
need not be a shareholder of the Company. A proxy form which may be used to make such appointment and give proxy
instructions accompanies this notice.
2.
To be valid any proxy form or other instrument appointing a proxy must be received by post, by scanned copy sent to
proxies@goodwingroup.com or (during normal business hours only) by hand at Ivy House Foundry, Hanley, Stoke-on-
Trent, ST1 3NR no later than 10.30am on 27th September, 2023.
3.
The return of a completed proxy form or other such instrument will not prevent a shareholder attending the Annual
General Meeting and voting in person if he/she wishes to do so.
4.
Any person, to whom this notice is sent, who is a person nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the shareholder by
whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual
General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may,
under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.
5.
The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 2 above does not
apply to Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders of the
Company.
6.
To be entitled to attend and vote at the Annual General Meeting (and for the purpose of the determination by the Company
of the votes they may cast), shareholders must be registered in the Register of Members of the Company at 10.30am on
27th September, 2023 (or, in the event of any adjournment, 10.30am on the date which is two days before the time of the
adjourned meeting). Changes to the Register of Members after the relevant deadline shall be disregarded in determining
the rights of any person to attend and vote at the meeting.
7.
As at 4th August, 2023 (being the last business day prior to the publication of this Notice) the Company’s issued share
capital consists of 7,509,600 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as
at 4th August, 2023 are 7,509,600.
8.
Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company under
section 527 of the Companies Act 2006, the Company may be required to publish on a website a statement setting out
any matter relating to: (i) the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit)
that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of the Company
ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with
section 437 of the Companies Act 2006. The Company may not require the shareholders requesting any such website
publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006. Where the Company is
required to place a statement on a website under section 527 of the Companies Act 2006, it must forward the statement to
the Company’s auditor not later than the time when it makes the statement available on the website. The business which
may be dealt with at the Annual General Meeting includes any statement that the Company has been required under
section 527 of the Companies Act 2006 to publish on a website.
9.
In order to facilitate voting by corporate representatives at the meeting, arrangements will be put in place at the meeting
so that (i) if a corporate shareholder has appointed the chairman of the meeting as its corporate representative with
instructions to vote on a poll in accordance with the directions of all of the other corporate representatives for that
shareholder at the meeting, then on a poll those corporate representatives will give voting directions to the chairman and
the chairman will vote (or withhold a vote) as corporate representative in accordance with those directions; and (ii) if more
than one corporate representative for the same corporate shareholder attends the meeting but the corporate shareholder
has not appointed the chairman of the meeting as its corporate representative, a designated corporate representative will
be nominated, from those corporate representatives who attend, who will vote on a poll and the other corporate
representatives will give voting directions to that designated corporate representative. Corporate shareholders are
referred to the guidance issued by The Chartered Governance Institute on proxies and corporate representatives
(www.icsa.org.uk) for further details of this procedure. The guidance includes a sample form of representation letter if the
chairman is being appointed as described in (i) above.
10.
None of the Directors has a service contract with the Company.
11.
If approved by shareholders at the Annual General Meeting on 29th September, 2023, the ordinary dividends of 115p per
share will be payable in equal instalments of 57.5p per share on 6th October, 2023 and on or around 12th April, 2024 to
shareholders on the register on 15th September, 2023 and on or around 22nd March, 2024 respectively.
2
GROUP STRATEGIC REPORT
GOODWIN PLC
CHAIRMAN’S STATEMENT
The “Trading” pre-tax profit for the Group for the twelve month period ended 30th April, 2023, was
£18.9 million (2022: £17.2 million) an increase of 10% on revenue of £186 million (2022: £144
million). Trading profit for this purpose is defined as the Group pre-tax reported profit of £22.1 million
less the positive impact of our interest rate swap, having increased in value by a further £3.2 million.
The £3.2 million movement relates to the 30th April, 2023 valuation of our £30 million interest rate
swap derivative that expires in August 2031, whereby we have fixed our interest rate on £30 million
of debt for ten years at less than 1% for a ten year term. We described in the Chairman’s statement
within last years Annual Report why the movements in valuation of the interest rate swap shall be
excluded, as well as being excluded for dividend purposes.
The Directors propose an increased dividend of 115p (2022: 107.80p) per share.
For the financial year ending on 30th April 2023, the Group has demonstrated substantial
progression in its transformation, particularly noted in the handling of increased workload. There
was a significant 68% increase in order intake compared to the last year, predominantly at Goodwin
Steel Castings Limited and Goodwin International Limited, contributing to the start of the rebound of
our Mechanical Engineering Division, which had experienced challenges in recent years. As of the
date of the current report, the Group’s cumulative future orders stand at record £271 million.
Mechanical Engineering Division
Whilst there has been some resurgence for petrochemical valves for new LNG projects around the
world, due to energy uncertainty from current world events, assisting our valve manufacturing
companies, it is the combined package that our foundry, Goodwin Steel Castings and the precision
project engineering facility Goodwin International offers, which has led to the largest part of new
orders shown in the Group workload, with them being primarily for the nuclear decommissioning
and naval markets.
Due to the work that these two businesses have excelled at, whilst diversifying away from their
mainstay of petrochemical-based work a decade ago, be it discrete orders or orders that combine
the skillset of the organisations, the future looks bright. The programmes of work, that are actively
ramping up now, are being exploited to win more and more of the same, supporting projects that will
still be ongoing in a decade's time.
A lot of this work has only been possible as a result of the significant investment into Goodwin Steel
Castings over recent years. We focused on what needed to be done to become one of the West’s
large casting suppliers of choice for large technically advanced castings that we are manufacturing
now. These investments look set to repay the faith the Board had in the company and after a long
drought, they should now meaningfully contribute to the Group’s performance going forward.
The supply of heavy duty submersible pumps, primarily to the mining industry, is 19% up on last
year. The pump companies in India, Brazil, Australia and South Africa continue to convert
customers from competitors’ pumps that are not as reliable and robust as the Goodwin pump, which
is specifically designed for the most demanding applications. In the year, a new hydraulically
powered variant of our submersible slurry pump that can be mounted directly on 10 – 30 tonne
excavators, driven by the excavator’s hydraulics, was launched. The addition of this hydraulic pump
opens up a new market area (Heavy Construction) in terms of customers and applications that will
complement the natural growth that is expected for the electrically driven pumps. It will be a
distributor-based market with the pump being marketed as an excavator accessory, thus allowing all
the
3
GROUP STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
existing pump companies, that are profitable, to bolt on a complementary product with minimal
increases in overheads, all for applications that do not compete with our existing pump business.
Duvelco, the Group’s latest and largest investment into a new business area, which will facilitate the
production of high operational temperature polyimide polymer resins, is on course to be completed
in line with our previously disclosed timeline. Commercial operation of our initial plant is expected to
occur prior to June 2024. As soon as production material is available, the team will look to
commence gaining sales traction and break into this new market sector for the Group.
It has been a good year with real progress being made. The Division has adeptly navigated contract
and customer management challenges across all sectors, with the overall divisional profitability up
33% on an increased turnover of 41%.
Refractory Engineering Division
In the year there have been two major notable successes. The first major achievement has occurred
at Brassington in Derbyshire, where the team at Hoben International Limited (Hoben) has
successfully installed and commissioned a second calciner. The calciner supplies one of the key
raw materials for the investment casting powder, and as such, the installation not only enables the
Division to continue to grow, but has provided the Division with a level of business continuity that we
never had the benefit of before. In order to increase capacity to accommodate continued growth in
ground silica sales, a third ball mill is in the process of being installed and is planned to be
commissioned before the end of the calendar year.
The second success relates to Dupré Minerals Limited (Dupré), which supplies a range of refractory
products that typically contain vermiculite. During the year the Company has achieved record
trading profits by increasing its profitability by over 50%. The Company has maximised its position
through the supply of its traditional products as well as growing its newer products. The energy crisis
brought on by the Ukraine conflict has led to a surge in the number of wood stoves being installed,
for which Dupré supplies the internal vermiculite insulation boards.
In addition to the supply of boards, Dupré’s internally developed product, known as AVD that
addresses the burning issues surrounding lithium-ion battery fires has taken a step forward. The
momentum in sales is starting to provide a respectable contribution to the Group’s profits. AVD
extinguishing agent and fire extinguishers are now being sold in over forty five countries with
additional distributors being appointed in new territories
on a regular basis. In recent weeks Underwriters Laboratory (UL) certification for component
recognition of AVD as an extinguishing agent and certification of a six litre fire extinguisher
containing AVD to UL8 has now been obtained. This is a significant milestone for opening up sales
into the USA and other global markets that require UL Certification and it has been pleasing to see
that the order input via multiple sources for AVD in the first two months of this financial year was
equal to more than the last half of 2023. Expansion of the AVD manufacturing capacity is planned in
the coming year.
Sales of jewellery investment powder, moulding rubber and injection waxes have remained strong
within the year. Final customer approvals for X-Sil respirable silica free investment powder are in
their final stages at key reference customers in the USA and Europe. This has been a long process
which should start to generate sales in the coming year. India remains the key growth country for
jewellery production around the world and in order to increase production capacity for both
investment powder and injection wax production in India a newly constructed larger production
facility will be completed and commissioned within the current financial year.
4
GROUP STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
Carbon Reduction Activities
Over the course of the year, the Group has continued working on its carbon neutral programme and
has spent a further £2 million on renewables, specifically solar panels where the power generated
will be utilised on site. In total, the Group has now completed sixteen of the twenty two individual
electricity projects that were initially targeted,
which includes the installation of 5.7 MWp of solar panels. The results of this will reduce the Group's
electricity purchased from the national grid by over 24.7% per year, amounting to savings of over £1
million per year, providing a reduction of 1,365 tonnes equivalent of carbon dioxide (CO 2) per year.
As noted in last year’s Annual Report, the
remaining projects are being held up by the District Network Operator. Once this permission, along
with planning permission where required, has been obtained there is potential to install a further
10MW of solar panels across our sites. Over half of this will be based at Hoben in Derbyshire where
we intend to also apply for planning for two 2.5MW wind turbines. The power generated from these
installations will be fully utilised by the Group and will not be exported back to the grid.
Two other major components of the carbon neutral programme are the conversion of our 4MW/hr
natural gas burners on both calciners at Hoben to hydrogen and offsetting our CO 2 footprint, that
cannot be eliminated in its entirety without ceasing operation. Despite two unsuccessful grant
applications to BEIS to mitigate the very high cost of the electrolysis machine required to make
onsite green hydrogen, we are continuing to pursue government support, as the Group’s carbon
neutral target heavily depends on finding an alternative to burning natural gas. However, for all other
gas processes that cannot be converted, the company has purchased a new 1,180 acre plot of land
that is ideally suited for planting 560,000 broad leaf trees. The planting scheme will be one of the
largest in the UK and over the next fifty five years will offset an average of 2,168 tonnes of CO 2 per
year, which for example, covers 100% of the CO 2 emissions that are generated at the foundry from
burning natural gas, as well as being able to offset other subsidiary gas burning processes.
Cashflow
The significant increase in order input and the downpayments associated with these orders,
coupled with the not insignificant levels of non-cash depreciation charges (£ 8 million) that occur
annually, provided the Group with a very strong cash generation in the year ended 30th April, 2023.
Notwithstanding the £23 million of capital expenditure that has occurred in the year, the Group's net
debt reduced to finish at £33 million which equates to a modest gearing of 26.3%. The major areas
of expenditure relate to the second calciner, Duvelco polymer production plant and extending the
melt shop at the foundry to enable a greater level of production capacity. Furthermore, the initial
costs in relation to a new 7,690sqm building in India, for which the Board had approved the
investment, due to both the refractory and pump businesses reaching capacity within the existing
facility, were also incurred in the year ending 30th April, 2023.
With the growth that is expected in the years to come, the Group has recently renewed a £10 million
revolving credit facility. This is as well as securing an additional £25 million of committed banking
facilities on effectively a four year term, as a prudent policy to ensure that guaranteed facilities and
the appropriate level of headroom is available to the Group, should it ever be required. The total
value of our facilities now available to fund the Group is £75.5 million, of which at the year end we
were only utilising 48%.
In line with the activity, the Group’s employee numbers are starting to increase. Our apprenticeship
programme continues to insulate the Group from the skills shortages that exists in the local area. To
date, a total of three hundred apprentices have completed
5
GROUP STRATEGIC REPORT
CHAIRMAN’S STATEMENT (continued)
the course at the Training Centre, with the vast majority of them now working within the subsidiaries
and the Group’s twelfth cohort of thirty apprentices will be starting in September 2023.
In March 2023, John Connolly, who had been the Group Chief Accountant and a Director of
Goodwin PLC for sixteen years, retired. He had worked for the Goodwin Group for over twenty
seven years and the Board takes the opportunity of thanking him for his hard work and loyalty over
the years, which helped move the Group forward. We wish him much happiness in his retirement.
We are also pleased to report that Adam Deeth has been brought on board as a highly capable
replacement for the Group Chief Accountant role.
We are once again extremely grateful to our UK and overseas directors, managers and employees
for their hard work in driving forward the performance of the Group.
T. J. W. Goodwin
7th August, 2023
Chairman
Alternative performance measures mentioned above are defined on page 104.
6
GROUP STRATEGIC REPORT
GOODWIN PLC
SUMMARY OF CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 30th April, 2023
2023
2022
Notes
£’000
£’000
CONTINUING OPERATIONS
Revenue…
…
…
…
…
…
…
…
…
…
3, 4
185,742
144,108
Cost of sales
…
…
…
…
…
…
…
…
…
(139,521)
(101,404)
GROSS PROFIT…
…
…
…
…
…
…
…
…
…
46,221
42,704
Distribution expenses
…
…
…
…
…
…
…
…
(3,741)
(3,743)
Administrative expenses
…
…
…
…
…
…
…
(22,167)
(20,654)
OPERATING PROFIT …
…
…
…
…
…
…
…
…
20,313
18,307
Finance costs (net)
…
…
…
…
…
…
…
…
7
(1,438)
(1,169)
Share of profit of associate company
…
…
…
…
…
14
65
63
TRADING PROFIT
…
…
…
…
…
…
…
…
…
18,940
17,201
Additional year on year unrealised gain on
10 year interest rate swap derivative …
…
…
…
…
…
3,189
2,740
PROFIT BEFORE TAXATION
…
…
…
…
…
…
…
5
22,129
19,941
Tax on profit*
…
…
…
…
…
…
…
…
…
8
(5,616)
(6,321)
PROFIT AFTER TAXATION…
…
…
…
…
…
…
…
16,513
13,620
ATTRIBUTABLE TO:
Equity holders of the parent
…
…
…
…
…
…
…
15,904
12,980
Non-controlling interests
…
…
…
…
…
…
…
609
640
PROFIT FOR THE YEAR
…
…
…
…
…
…
…
…
16,513
13,620
BASIC EARNINGS PER ORDINARY SHARE (in pence)**
…
…
9
206.81p
169.14p
DILUTED EARNINGS PER ORDINARY SHARE (in pence)
…
…
9
206.81p
169.14p
*
The Group has received significant benefit from the UK superdeduction capital allowances programme, that has
substantially reduced the corporation tax payable in the UK. For further details, see the additonal commentary in note 8.
The full financial statements and accompanying notes are on pages 48 to 104.
7
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL
The Group’s main OBJECTIVE and PURPOSE is to have a sustainable long-term engineering based
business with good potential for profitable growth while providing a fair return to our shareholders.
The Board’s VALUES of engineering excellence, quality, efficiency, reliability, competitive price and
delivery contribute to the delivery of its strategy.
The Board’s STRATEGY to achieve this is:
•
to supply a range of technically advanced products to growth markets in the Mechanical Engineering
and Refractory Engineering segments in which we have built up a global reputation for engineering
excellence, quality, efficiency, reliability, competitive price and delivery;
•
to manufacture advanced technical products profitably, efficiently and economically;
•
to maintain an ongoing programme of investment in plant, facilities, sales and marketing, research and
development with a view to increasing efficiency, reducing costs, increasing performance, delivering
better products for our customers, expanding our global customer base and keeping us at the forefront
of technology within our markets, whilst at all times taking appropriate steps to ensure the health and
safety of our employees and customers;
•
to control our working capital and investment programme to ensure a safe level of gearing;
•
to maintain a strong capital base to retain investor, customer, creditor and market confidence and so
help sustain future development of the business;
•
to support a local presence and a local workforce in order to stay close to our customers;
•
to invest in training and development of skills for the Group’s future;
•
to manage the environmental and social impacts of our business to support its long-term
sustainability.
BUSINESS MODEL
The Group’s focus is on manufacturing within two sectors, Mechanical Engineering and Refractory
Engineering, and through this division of our manufacturing activities, our overseas business facilities
and our global sales and marketing activities, the Group benefits from market diversity. Further details of
our business and products are shown on our website www.goodwin.co.uk.
Mechanical Engineering
The Group specialises in supplying precision engineered solutions and industrial goods into critical
applications, generally on a project basis, more often than not involving the complementary skill set of
other group companies to deliver the requirement. The projects normally involve international
procurement, high integrity castings, forgings or wrought high alloy steels, carbon fibre composite
structures, precision CNC machining, complex welding and fabrication, and other operations as are
required. In addition to specialist projects, the Group manufactures and sells a wide range of dual plate
check valves, axial nozzle check valves and axial piston control and isolation valves. These solutions and
products typically form part of large construction projects, including the construction of naval vessels,
nuclear waste treatment, nuclear power generation, liquefied natural gas (LNG), gas, oil, petrochemical,
mining, and water markets.
We generate value by creating leading edge technology designs, globally sourcing the best quality raw
material at good prices, manufacturing in highly efficient facilities using up to date technology to provide
very reliable products to the required specification, at competitive prices and with timely deliveries.
The Group through its foundry, Goodwin Steel Castings Limited, has the capability to pour high
performance alloy castings up to 35 tonnes, radiograph and also finish CNC machine and fabricate them
at the foundry’s sister company, Goodwin International Limited. This capability is targeting the defence
industry and nuclear decommissioning, the oil and gas industry, as well as large, global projects requiring
high integrity machined castings.
Goodwin International Limited, the largest company in the Mechanical Engineering Division, not only
designs and manufactures dual plate check valves, axial nozzle check valves and axial piston control
and isolation valves but also undertakes specialised CNC machining and fabrication work for nuclear
decommissioning projects. Goodwin International Limited also
8
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
has a division that is focused on manufacturing / machining high precision, high integrity components for
naval marine vessels. Noreva GmbH also designs, manufactures and sells axial nozzle check valves.
Both Goodwin International Limited and Noreva GmbH purchase the majority of the value of their sand
mould castings from Goodwin Steel Castings Limited for their ranges of check valves and this vertical
integration gives rise to competitive benefits, increased efficiencies and timely deliveries.
At Goodwin Pumps India Private Limited we manufacture a superior range of submersible slurry pumps
for end users in India, Brazil, Australia and Africa. Easat Radar Systems Limited and its subsidiary, NRPL
Aero Oy, design and build bespoke high-performance radar surveillance systems for the global market of
major defence contractors, civil aviation authorities and coastal border security agencies. Easat has a
sister company, Easat Radar Systems India Private Limited, that also manufactures, sells and maintains
radar systems. We create value on these by innovative design, assembly and testing in our own facilities
using bought in or engineered in-house components.
Refractory Engineering
Within the Refractory Engineering Division, Goodwin Refractory Services Limited (GRS) generates value
primarily from designing, manufacturing and selling investment casting powders, injection moulding
rubbers and waxes to the jewellery casting industry. GRS also manufactures and sells these products to
the tyre mould and aerospace industries. The Refractory Engineering Division has five other investment
powder manufacturing companies located in China, India and Thailand which sell the casting powders
directly and through distributors to the jewellery casting industry and also directly to tyre mould and
aerospace industries.
These companies are vertically integrated with another of our UK companies, Hoben International
Limited (Hoben), which manufactures cristobalite, which it sells to the six casting powder manufacturing
companies as well as producing ground silica that also goes into casting powders and other UK uses of
silica. Hoben now also manufactures different grades of perlite, and a patented range of biodegradable
bags, known as Soluform, for use inside traditional hessian / jute bags for the placement of concrete in or
around rivers.
The other UK refractory company is Dupré Minerals Limited (Dupré) which focuses on producing
exfoliated vermiculite that is used in insulation, brake linings and fire protection products, including
technical textiles that can withstand exposure to high temperatures. Dupré also sells consumable
refractories to the shell moulding precision casting industry. Dupré has designed, patented and is now
selling a range of fire extinguishers and an extinguishing agent for lithium-ion battery fires that utilises a
vermiculite dispersion as the fire extinguishing agent.
9
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
BUSINESS DIVERSITY AND PERFORMANCE
As
can
be
seen
in
note
3
to
these
financial
statements,
in
the
year
to
30th
April,
2023
the
operating
profits
of
the
Group
increased
11%
year on year.
With the Mechanical Engineering
Division
having
generated
49%
of
the
Group’s
operating profit and the Refractory Engineering
Division having generated 51%. The split between
the divisions remains largely unchanged due to
the ongoing success of the Refractory Engineering
Division as sales of its core products continued
to
be
buoyant
throughout
the
year,
especially
within
the
Indian
investment
casting
powder
market
which
is
supplied
by
our
factory
in
Chennai.
Furthermore, whilst the Mechanical Engineering
Division
revenue
has
increased
by
41%
in
the
year, its operating profit has increased by 33%,
which is a feature of the work starting to actively
ramp up coupled with the initial lower levels of
factory throughput that occurs at the beginning
of
certain
long-term
programmes
whilst
the
customer
confirms
their
desired
level
of
assurance,
which
may
result
in
contractual
change orders being necessary. Looking forward,
the
Board
continues
to
expect
the
split
in
operating
profits
to
swing
back
to
a
60:40
split
in favour of the Mechanical Engineering Division
once the profits within these programmes starts
to
flow
through.
This
is
despite
the
Refractory
Engineering
Division
continuing
to
grow,
as
its
newer product such as the AVD fire extinguishing
agents start to become a material contributor.
The
Group's
diversification
is
one
of
its
key
strengths
that
over
the
years
has
insulated
it
from
the
various
negative
events
that
have
unfolded
and
impacted
specific
industries
as
well as specific geographical markets.
The Group
consists
of
21
operating
entities
that
are
based
in 13 different counties, that in the year supplied
52
technically
sophisticated
Mechanical
and
Refractory products to more than 100 countries.
Due to this the geographical segmentation report
of the Group, as is reported on pages 64, remains
relatively unchanged from the prior year with a
fairly
even
spread.
Whilst
the
turnover
to
the
USA only represents 11% of the Group’s turnover,
it
has
increased
by
over
41%
versus
last
year,
which principally relates to the increased supply
of machined castings to the naval market, which
will continue to grow over the next six years.
10
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
KEY PERFORMANCE INDICATORS
The key performance indicators for the business are listed below:
The
alternative
performance
measures
referred
to
above
are
defined
on
page
104.
The
alternative
performance
measures
are
important to management and the readers of
the Annual Report in assessing the Group’s
performance and benchmarking it within its
respective industries.
* The calculation of Gross Profit is after taking
into account plant depreciation, training, HR,
R&D, sales, exhibition and sales travel costs,
as well as the material and labour costs.
11
GROUP STRATEGIC REPORT
OBJECTIVES, STRATEGY AND BUSINESS MODEL (continued)
DIVIDEND AND CAPITAL EXPENDITURE POLICY
The Board proposes to pay a dividend of 115 pence per share, up 7% on the previous year (2022:
107.80p) . The proposed dividend has been calculated using the Group’s profit after taxation figure, plus
depreciation and amortisation for the year ending 30th April, 2023, after having excluded the non- cash
£3.2 million mark to market unrealised gain relating to the ten year interest rate swap.
In line with expectations, following the Group's green investments, the Group finished the year with a
gearing of 26.3% (2022: 25.8%). Due to the ongoing capital investment programme, the Board proposes
to continue to smooth the Group’s cash flow by splitting the payment of the proposed ordinary dividends
of 115 pence per share into equal instalments of 57.5 pence per share on 6th October, 2023 and on or
around 12th April, 2024 to shareholders on the register on 15th September, 2023 and on or around 22nd
March, 2024 respectively.
*Further details are included in the Alternative Performance Measures on page 104.
12
GROUP STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's operations expose it to a variety of risks and uncertainties. The Directors confirm that they have carried out a
robust assessment of the principal risks the Company faced, including those that would threaten its business model, future
performance, solvency or liquidity.
Market risk: The Group provides a range of products and services, and there is a risk that the demand for these products and
services will vary from time to time because of competitor action or economic cycles or international trade friction or even
wars. As shown in note 3 to the financial statements, the Group operates across a range of geographical regions, and its
turnover is split across the UK, Europe, USA, the Pacific Basin and the Rest of the World.
Operating in many territories helps spread market risk. Similarly, the Group operates in both Mechanical Engineering and
Refractory Engineering sectors, mitigating the impact of a downturn in any one product area as has been seen in recent
financial years.
The potential risk of the loss of any key customer is limited as, typically, no single customer accounts for more than 10% of
annual turnover.
As described in the Business Model, the Group generates significant sales from nuclear new build and decommissioning,
naval propulsion marine applications and ship hull components as well as from valves
it supplies to LNG, oil, chemical and water markets. The Mechanical Engineering Division also sells submersible pumps that
are supplied to the mining industries and radar systems that are used for civil and defence applications. The Refractory
Engineering Division sells vermiculite and perlite to the insulating and fire prevention industry and our investment casting
powder companies indirectly sell to the jewellery consumer market through the supply of investment casting moulding
powders, waxes, silicone and natural rubber.
Technical risk: The Group develops and launches new products as part of its strategy to enhance the long-term value of the
Group. Such development projects carry business risks, including reputational risk, abortive expenditure and potential
customer claims which may have a material impact on the Group. The potential risk here is seen as manageable given the
Group is developing products in areas in which it is knowledgeable and new products are tested as far as possible prior to
their release into the market.
Product failure / contractual risk: The risks that the Group supplies products that fail or are not manufactured to
specification are risks that all manufacturing companies are exposed to but we try to minimise these risks through the use of
highly skilled personnel operating within robust quality control system environments, using third party accreditations where
appropriate. With regard to the risk of failure in relation to new products coming on line, the additional risks here are
minimised at the research and development stage, where prototype testing and the deployment of a robust closed loop
product performance quality control system provides feedback to the design department for the products we manufacture
and sell. The risk of not meeting safety expectations, or causing significant adverse impacts to customers or the environment,
is countered by the combination of the controls mentioned within this section and the purchase of product liability insurance.
The risk of product obsolescence is countered by research and development investment.
Supply chain and equipment risk: Failure of a major supplier or essential item of equipment presents a constant risk of
disruption to the manufacturing in progress, especially in these times of high inflation associated with the conflict in the
Ukraine. Where reasonably possible, management mitigates and controls the risk with the use of dual sourcing, continual
maintenance programmes, and by carrying adequate levels of stocks and spares to reduce any disruption.
Health and safety: The Group’s operations involve the typical health and safety hazards inherent in manufacturing and
business operations. The Group is subject to numerous laws and regulations relating to health and safety around the world.
Hazards are managed by carrying out risk assessments and introducing appropriate controls, as well as attending safety
training courses.
Acquisitions: The Group’s growth plan over recent years has included a number of acquisitions. There is the risk that these,
or future acquisitions, fail to provide the planned value. This risk is mitigated through financial and technical due diligence
during the acquisition process and the Group’s inherent knowledge of the markets they operate in.
Financial risk: The principal financial risks faced by the Group are changes in market prices (interest rates, foreign
exchange rates and commodity prices). As reported elsewhere within these financial statements, the Company, on 2nd July,
2021 signed a contract to mitigate the impact of interest rate risk by taking out an interest rate swap derivative fixing £30
million of notional debt at less than 1% versus the variable SONIA rate for a period of ten years, commencing 1st September,
2021. Detailed information on the financial risk management objectives and policies is set out in note 28 to the financial
statements. The Group has in place risk management policies that seek to limit the adverse effects on the financial
performance of the Group by using various instruments and techniques, including credit insurance, stage payments, forward
foreign exchange contracts, secured and unsecured credit lines.
Regulatory compliance: The Group’s operations are subject to a wide range of laws and regulations. Both within Goodwin
PLC and its subsidiaries, the Directors and Senior Managers within the companies make best endeavours to ensure we
comply with the relevant laws and regulations. The Group ensures that high ethical standards and values are adopted,
specifically with regards to anti-corruption, anti-bribery and human rights. During the year, the Group has carried out
enhanced sanctions training and updated internal policies to reflect the associated risks.
13
GROUP STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
IT security: The Group performs regular and remote off site backups of its IT systems, from time to time engaging external
companies to test and report any weaknesses and deficiencies found to enable solutions to be put in place to mitigate and
minimise the risk of an IT security breach. The Group is in the process of re-evaluating the need to invest further in this area
over the next twelve months.
Energy and Climate Change: The recent geopolitical tensions, with the current conflict in Ukraine, combined with the UK
Government's energy policy over the last few years to reduce carbon emissions has left the country exposed to the fragile
global energy system which has driven significant increases in the cost of power. Following the impact this has had on the
Group earlier on in the year, the Group has amended its strategy to manage the risk through hedging strategies,
incorporating price escalation clauses into the longer term contracts, aided by the coming on stream of increasing levels of
low cost solar power around the Group. Furthermore, the Group has successfully completed sixteen of the twenty two
individual electricity projects that were initially targeted, which include the installation of 5.7 MW of solar panels. The results
of this will reduce the Group's electricity purchased from the national grid by over 24.7% per year, amounting to savings of
over £1 million per year as compared to buying electricity from the grid.
14
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY
The Board as a whole is responsible for decisions relating to the long-term success of the Company and the way in which
their duties have been discharged during the year in terms of the strategic, operational and risk management decisions and
these can be found within the Strategic Report on pages 8 to 14.
As set out below and in line with Section 172 of the Companies Act 2006, through engagement the interests and views of the
Group’s employees and other stakeholders are considered by the Board within its decision-making process as well as the
impact they have on the environment, our reputation and the surrounding communities. During the year, unless otherwise
stated, the principal decision made in the year, impacting its stakeholders, other than routine decisions that are made on a
year-on-year basis as part of running the business, was the renewal and increase of its banking facilities, as well as approval
to proceed with a tender offer. For further details, see page 90.
Non-Financial and Sustainability Information Statement
As per the latest disclosure requirement, under the Companies Regulations 2022, that came into effect this year, disclosures
on Climate related financial disclosures, Company’s employees, community issues, social matters, human rights and anti-
corruption and bribery can be found on pages 15 to 17 of the Annual Report.
Employees
Health and Safety: The Group acknowledges that many of its manufacturing processes and some materials that it handles
and sells are hazardous and that providing a safe environment for people at all of our facilities is an unconditional priority for
all of those charged with governance, in addition to each member of the workforce. In the year, as operations change, the
Group has managed the continually evolving risks that are inherent in manufacturing businesses by ensuring risk
assessments are carried out by all departments and as soon as an operational change is envisaged. Such assessments
enable the introduction of the appropriate controls to help
ensure that the workforce is protected from foreseeable hazards. Furthermore, awareness and training to continually reduce
risk and improve safety is a mind-set that is reinforced on a daily basis through the Group’s global “Safety Spectrum”
programme.
Employee consultation: The Group takes seriously its responsibilities to employees and, as a policy, provides employees
systematically with information on matters of concern to them. It is also the policy of the Group to consult where appropriate,
on an annual basis, with employees or their representatives so that their views may be taken into account in making
decisions likely to affect their interests. The Board considers the most effective form of engagement and involvement of its
employees for its size and complexity is by way of informal daily discussions between the employees, the Senior
Management and Board members who walk the floor, and the Company encourages its employees through its salary and
bonus arrangements. Engagement in the year is further supported through workforce representative meetings, local working
groups, team meetings, training, and an honest and open culture.
Employment of disabled persons: The policy of the Group is to offer the same opportunity, including training, development
and promotion, to disabled people, and those who become disabled, as to all others in respect of recruitment and career
advancement, provided their disability does not prevent them from carrying out the duties required of them in accordance
with the requirements of the Equality Act 2010.
Diversity Policy: The Group is committed to promoting diversity of gender, social and ethnic backgrounds and personal
strengths, in addition to ensuring that everyone has the same opportunities for employment and
promotion based on ability, qualifications and suitability for the work in question. The Group invests in training and
development of skills for the Group’s future and has a long-term aim that the composition of our workforce should reflect that
of the community it serves. The Group continues to strive to improve the balance of diversity by reviewing gender reporting
and promoting diversity through training and development, recruitment, our business culture and the Board’s Strategy. Whilst
the senior independent directorship is held by Jennifer Kelly, following the assessment that was carried out on 30th April,
2023 the Board does not comply fully with the latest listing requirements that have come into effect in the year, which require
40% of the Board to be female and for at least one Board member to be from an ethnic minority background. Whilst we fully
acknowledge the necessity and benefits of a diversified leadership, we are unable to currently meet these specific targets
due to the Board consisting of primarily executive Directors because of its size and complexity, as set out on page 22. This
coupled with the fact that the appointments of the Board are made with the utmost consideration for the individual's
qualifications, experience, and ability to contribute to the strategic direction of the Company, we have found ourselves at
present, based on these criteria, unable to make the necessary adjustments without compromising the integrity and
efficiency of our Board. Nonetheless, we are examining ways of meeting these requirements over the long-term by
continuing to promote diversity at all levels of the Company, whilst also maintaining the Board’s dynamism and the required
level of experience, ability and qualifications.
15
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Diversity Policy: (continued)
The following tables set out the breakdown of our average number of employees and Board members by gender and age:
Breakdown by gender
Main Board and
Senior
Employees
Total
Year ended 30th April, 2023
Company Secretary
Management
Number of female employees
2
14
190
206
Number of male employees
5
69
864
938
Total number of employees
7
83
1,054
1,144
% of female employees
29%
17%
18%
18%
% of male employees
71%
83%
82%
82%
Breakdown by age
Main Board and
Senior
Employees
Total
Year ended 30th April, 2023
Company Secretary
Management
Number of employees aged 16-21
-
-
81
81
Number of employees aged 22-40
4
11
496
511
Number of employees aged 41-65
3
65
456
524
Number of employees aged over 65
-
7
21
28
Total employees
7
83
1,054
1,144
% aged 16-21
-
-
8%
7%
% aged 22-40
57%
13%
47%
45%
% aged 41-65
43%
79%
43%
46%
% aged over 65
-
8%
2%
2%
Suppliers, Customers and Regulatory Authorities
The Board considers market trends regularly and reviews their likely long-term implications. Our business relationships and
procedures are developed over time and are regularly reviewed to ensure as a Group we conduct business responsibly and
sustainably. The Board acquires a first-hand understanding of its business relationships through regular dialogue and site
visits where appropriate. Engagement is ensured from the initial tender processes to embedded sales and engineering
project meetings and reinforced by an open door culture, whilst actively seeking feedback.
The five Executive Directors of the Board are actively involved with the day to day business and management of the
subsidiaries thereby allowing a good understanding of key members of the supply chain and also ensuring a fair purchase
culture.
Maintaining High Standards of Business Conduct
Ethics and Sustainability: We are committed to conducting business responsibly and ethically. We endeavour to ensure
that our staff, suppliers and business partners adopt the same or similar high ethical standards and values. This applies, but
is not limited to human rights, modern slavery, anti-bribery and corruption and is all enhanced by an anonymous whistle-
blowing system, which is rountinely reviewed and independently investigated if required.
Shareholders: Shareholder engagement occurs through the Annual Report, regulatory disclosures, our website, site visits
and the Annual General Meeting, coupled by supplementary RNS announcements made during the course of the year.
Throughout the year, the Chairman, on behalf of the Group, maintains an active dialogue with its shareholders, in order to
understand their views on governance and performance against the strategy, as well as providing its investors, including
institutional investors, an opportunity to ask questions, discuss the performance of the Group and make suggestions. Further
engagement is obtained through shareholder site visits, which are hosted directly by the Chairman and the other members of
the main Board. The Board aims to accommodate such requests as and when they are appropriate to do so. The Group’s
Non-Executive Director is also available before and after at the Annual General Meeting to discuss any matters shareholders
might wish to raise. Such regular first -hand engagement with shareholders enables the Chairman to provide the Board with
updates so the views of shareholders are taken into consideration.
The Company has one class of ordinary shares, which have the same rights as regards voting, distributions and on
liquidation. Management are also significant shareholders in the Company, holding approximately 52.74% (2022: 52.48%) of
the register. In accordance with LR6.5, there is a controlling shareholder agreement in place. Executive directors M.S.
Goodwin, S.R. Goodwin, B.R. Goodwin and T.J.W. Goodwin are party to the controlling shareholders agreement, as well as
Audit Committee members, J.W. Goodwin and R.S. Goodwin. On this basis the Board feels that the Executive Directors are
fully aligned with shareholders.
16
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Communities: During the year the Group has continued to communicate to all employees our culture of responsibility and
support for local communities where possible. The Board encourages its sites to support their local communities through
charitable activities and initiatives to support the local area within which they operate. Engagement occurs through dialogue
with the local councils and charities.
Donations: The Group made no political donations during the year (2022: £nil). Donations by the Group for charitable
purposes amounted to £91,000 (2022: £71,000). The majority of these were made to local communities within the Group’s
operating environments.
Environment – Task Force on Climate-related Financial Disclosures (TCFD)
The following report includes nthe climate- related financial disclosures that are consistent with the eleven TCFD
recommendations Climate change is a core challenge for the Group, as we transition and work towards becoming a carbon
neutral Group, whereby the carbon emitted from our activities are balanced by absorbing carbon emissions. As an
engineering Group, that includes a heavy goods steel foundry and high temperature refractory processing business, the
consumption of energy is an integral feature in the manufacture of the complex products that are manufactured by the
business. Over the past few years the Group has been actively developing and implementing our carbon neutral plan and
following a group wide assessment, we have set a target of becoming carbon neutral by 2035.
The initiative consists of five mechanisms to achieve our carbon neutral target:
Initiative
Description
Achievements to date
Future Plans
Mechanism
Reduce
Taking engineering steps
An 11% reduction in electricity has
Ongoing monitoring, review of
Consumption
to reduce our consumption
been achieved over the last two years.
plant and modifications to our
of gas and electricity in our
Modifications range from electric
manufacturing processes to
(Scope 1 & 2
companies by investing in
company cars, lighting, automatic
reduce our overall consumption
more efficient plant and /
switching off programming, base load
of gas and electricity.
emissions)
or changing our working
monitoring and replacement of heavy
practices.
duty fans, use of inverters and pumps
that offer a greater power efficiency.
Renewables
Utilisation of self-generated
14 of the originally planned 22
Over the short to medium term,
power through the use of
projects have been completed,
a further 10MWp of solar power
solar panels and wind
providing the Group with 5.7MWp
is planned and ready to be
turbines.
of solar power, and significantly
installed but is pending
contributing to reducing the Groups
permissions from the Distribution
electricity purchased by 24.7%, over
Network Operator.
the last two years.
Installation of two wind turbines
This alone will save the Group in
at Hoben International has been
excess of £1 million per year by
investigated and we have
utilising self-generated solar at 4.5p
commenced the planning
versus electricity from the grid at
process with the local council.
18p per kwh.
Hydrogen
Finding and investing in a
Following extensive research with
Continue to seek alternatives to
hydrogen generation power
the use of a wind and solar powered
operating a 1580 degree Celsius
plant solution that can
electrolysis machine, hydrogen was
process without the use of natural
replace the natural gas
identified as a carbon free alternative
gas and / or obtain Government
utilised in our more energy
for our continuous gas burning
support for a green hydrogen
intensive processing
process. A bespoke first of class
plant.
activities.
solution was designed but following
two unsuccessful grant applications
the project is on hold due to it not
being commercially viable without
the support of government.
Offsetting
Investing in land suitable for
With the knowledge that the Group
Our specialist contractor,
planting trees to offset the
would not be able to naturally reduce
Scottish Woodlands, who have
CO 2 that is generated from
its carbon footprint to zero, it has
advised throughout the process
activities that cannot be
purchased a 1,180 acre site in Wales
will commence Stage 1 planting
removed by the above three
to plant 560,000 trees that will
over the next eighteen months.
mechanisms.
generate in the region of 120,000
tonnes of CO 2 offset credits over the
next 55 years. This will offset more
than 100% of our steel foundry’s gas
consumption, the largest gas
consumer within the Mechanical
Engineering Division of the Group.
3rd Party
Take strategic steps to
The Group has developed a draft
The Group endeavours to analyse
Emissions
reduce Scope 3 emissions
Scope 3 emissions policy and plan.
and set specific Scope 3 medium
that are produced not by the
term KPI’s to reduce them in the
(Scope 3
Company itself but by those
coming years.
indirectly responsible within
emissions)
its value chain.
17
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Environment – Task Force on Climate-related Financial Disclosures (TCFD) (continued)
A £13 million additional banking facility, specifically for the funding of “Green Projects”, to accelerate the Group’s
implementation of Green initiatives and projects, was put in place in January 2022. As at 30th April, 2023, the Group had
utilised £8.2 million of the £13 million facility on the above initiatives, with many of the initiatives having paybacks that are less
than four years.
The reason why we are only taking a fifty five year view on the offsetting produced by the woodland project, despite the fact
that it will generate credits for one hundred years, is that by 2073 all electricity, used by the Group, will be generated by Green
methods and all hydro carbon needed for very high temperature processing applications is expected to have been converted
to hydrogen, which will be generated using green electricity.
Governance
The Board has overall accountability for the management of all climate change related risks and opportunities, as well as
being responsible for the day to day implementation, monitoring and management of our climate goals. Climate-related risk is
considered by the Board as a standalone agenda item and accordingly receives regular updates on its environmental
assessments, commitments and performance from the respective individuals around the group that have been tasked with a
climate-related job to carry out. The updates are obtained as and when matters and opportunities arise, at which point they
are then relayed on to the rest of the Board. The Group’s Audit Committee supports the Board in ensuring climate-related
issues are integrated into the Group’s activities and risk management processes, in addition to reviewing and recommending
policy proposals to the Board.
Risk Management
Climate change related matters are monitored by the Board and Audit Committee to ensure that they are embedded in our
risk management and planning process, in addition to our long-term strategic decision-making. The identification and
management of climate change risks follow our established risk-management process, of which the key elements are set out
within the Strategic Report, on pages 13 to 14.
Furthermore the Board is directly able to determine which risks and opportunities could have a material impact on the Group,
as well as how to prioritise them, by having a flat management structure and taking a hands-on approach so that they are
actively immersed within all aspects of the business and each subsidiary.
It is the opinion of the Board that, with the Group's activities on Green projects, climate change will have no significant effect
on the Group's financials, including:
1.
Contract profitability. Whilst there will be fewer contracts for the oil and gas markets, we have already substituted a
significant proportion of these contracts with new naval component supply and nuclear decommissioning activity. Whilst
cost increases can be expected, the Company has the ability to pass these costs on to the customers through the use of
short validity periods on quotes as well as building in escalation clauses within its longer term contracts. The fact that it is
Group policy to manufacture and sell products with high technology and high gross margins assists in insulating the
Group from high energy costs.
2.
Going Concern of any Group company, as bank facilities will continue to be available and with the Group’s strong cash
generation, it has the ability to reduce its debts at a faster rate, should it so wish.
3.
Cash flow, generating our own green electricity is a much lower cost than buying electricity from the grid and our
investments are self-financing and will ultimately save the Group money over the life of those assets and projects.
4.
Carrying value and useful economic life of the Group's plant and equipment, investment and intangibles.
Had we still been heavily dependent on oil and gas project contracts and had done nothing on green power investments
the stated situation above would be different.
18
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Environment – Task Force on Climate-related Financial Disclosures (TCFD) (continued)
Metrics and Targets
Given the nature of our business and the diversification of our products and markets, the Board has determined that the total
of Scope 1 and Scope 2 emissions is the most appropriate metric to use to assess climate-related risks and opportunities in
line with its strategy and risk management process. The Group's key performance business metric is tonnes of CO 2 emitted
per £ million pounds of turnover of the Group. See below for a graphical disclosure of our historic emissions, achieved
reduction and forecast target of being carbon neutral by 2035.
Scope 1 and 2 Emissions Data
Carbon Neutral target, whilst possible, is heavily dependent on our gas usage and the government providing support to
industry to bridge the cost gap that will enable companies to invest in alternatives such as green hydrogen. Until this occurs,
the Group will not be able to reach its carbon neutral target as incurring the full cost that would be involved would be unviable
and not possible.
We calculate our GHG emissions using the GHG Protocol Corporate Accounting and Reporting Standard (revised edition).
19
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Strategy
In line with the Task Force on Climate-related Financial Disclosures (TCFD) reporting requirements and in conjunction with
our detailed assessment that has been carried out against the TCFD guidance, the following table sets out the impact of the
short, medium and long-term risks and opportunities that the Group has identified in relation to climate change.
As reported above, within the TCFD Risk Management section, the Boards hand on approach enables it to immediately
evaluate as and when climate-related risks and opportunities change and whether its strategy needs to be amended.
TCFD
Category
Potential Impact
Financial
Description
Scenario
Time
Magnitude
**
Frame*
Business
Resilience /
Readiness
Medium but
Ongoing
Le
gal
Pricing of GHG
Risk: Direct requirement to pay carbon taxes per
>3°C
Medium
reducing
Offsetting &
emissions
tonne emitted.
with carbon
Reduction
neutral
steps
&
activity
P
oli
cy
Higher
Risk: Increasing building, operation and transport
standards leading to increased investment into
2-3°C
Short
Medium
Manage
environmental
equipment and higher supply chain and material
standards
costs.
Electrification
Opportunity: Increased sales of AVD for use on
Short to
Positively –
sh
ifts
– growth in EV
2-3°C
Monitor
lithium ion battery fires.
Medium
High
transport
T
e
c
h
n
o
l
o
g
y
Contractual
Opportunity: Progressive transfer to higher value
2-3°C
Medium
Positively –
Manage
Projects
added products.
Medium
Substitution of
Opportunity: Transition to high temperature gas
powered manufacturing processes onto a green
2-3°C
Medium
Medium
Monitor
technology
alternative.
Manage –
De
ma
nd
Transition away
Risk: Reduced gross margin from sales of valves to
O&G exposure
>3°C
Medium
Medium
reduced from
from fossil fuels
the oil and gas industry.
60% to 23%,
over the last
E
nd
ten years.
Increased cost of
Risk: Impact on the availability and pricing of key
2-3°C
Medium
Low
Manage
raw materials
raw materials due to transitional and physical risks.
Repu
tatio
nal
Risk: Access to the financial industry and credit
Balance
Cost of Capital
becomes tied to high levels of sustainability
>3°C
Medium
High
and Reduce
performance.
Initiative
Risk: Attracting the highest level of talent should
Balance
Employee Risk
become easier as potential employees see the Groups
>3°C
Long
Low
and Reduce
prospects to becoming carbon neutral by 2035.
Initiative
Geographical
Medium /
diversification
Ph
ysi
cal
Natural /
Risk: Damage to physical assets and loss of revenue.
High
Insurance
Long
Business
Extreme Climate
>3°C
Continuity
Events
plans
Opportunity: Increased demand for submersible
Medium
Low
Monitor
pumps for disaster relief.
20
GROUP STRATEGIC REPORT
CORPORATE SOCIAL RESPONSIBILITY (continued)
Strategy (continued)
* Short < 3 years
Medium 3-5 years
Long > 5 years
**Worst Case scenario (>3ºC)
Our Worst Case Scenario sees a world where climate action is delayed by world governments failing to act on climate
change. This delay would result in a world where physical climate change risks are the greatest across our three scenarios.
Paris Alignment Scenario (2-3ºC)
This scenario sees a market-led transition to a lower carbon future through global government commitments to the Paris
Agreement. This would result in increased regulation of climate action and a reduction of the physical impacts of climate
change compared with our Worst Case scenario, where governments fail to legislate in accordance with the Paris
Agreement.
Transformation Scenario (<2ºC)
This scenario sees a rapid decarbonisation pathway, where global emissions are close to zero in 2040, driven by society. The
speed of change required to limit global warming to 1.5 degrees is likely to create stability in our supply chain as suppliers try
to keep pace with decarbonisation demands and shifting preferences towards localisation.
FORWARD-LOOKING STATEMENTS
The Group Strategic Report contains forward-looking type statements and information based on current expectations, and
assumptions and forecasts made by the Group. These expectations and assumptions are subject to various known and
unknown risks, uncertainties and other factors, which could lead to substantial differences between the actual future results,
financial performance and the estimates and historical results given in this report. Many of these factors are outside the
Group’s control. The Group accepts no liability to publicly revise or update these forward-looking statements or adjust them
for future events or developments, whether as a result of new information, future events or otherwise, except to the extent
legally required.
The Group Strategic Report was approved by the Board on 7th August, 2023 and is signed on its behalf by:
T. J. W. Goodwin
M. S. Goodwin
S. R. Goodwin
Director
Director
Director
21
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS
The Director’s have pleasure in presenting their reports and audited financial statements for the year ended 30th April, 2023.
The Directors’ have presented their Group Strategic Report on pages 3 to 21. The Group Strategic Report is intended to be
an analysis of the development and performance of Goodwin PLC and contains a description of the principal risks and
uncertainties facing the Group and an indication of likely future developments and the required statements under Statutory
Instrument 2008/410 Schedule 7 of the Companies Act 2006. The Chairman’s Statement is part of the Group Strategic
Report of the Directors for the year and provides the financial review, including some of the key performance indicators and
future trends of the business. Also included in the Group Strategic Report for the year are the Group’s Objectives, Strategy
and Business Model on page 8, Principal Risks and Uncertainties on pages 13 and 14, and the Corporate Social
Responsibility Report on pages 15 to 21.
The Board considers that the Chairman’s Statement, the Group Strategic Report, the Directors’ Reports and the Financial
Statements, taken as a whole, are fair, balanced and understandable and that they provide the information considered
appropriate for shareholders to assess the Group’s position and performance during the financial year and at the year end,
and to assess the business model and strategy.
Proposed ordinary dividends
The Directors’ recommend that an ordinary dividend of 115p per share (2022: 107.80p) be paid in equal instalments of 57.5p
per share on 6th October, 2023 and on or around 12th April, 2024 to shareholders on the register on 15th September, 2023
and on or around 22nd March, 2024 respectively. The ordinary dividend is subject to the approval of the shareholders at the
Annual General Meeting on 29th September, 2023.
See comments on page 12 regarding the Dividend Policy.
Directors
The Directors of the Company who have served during the year are set out below.
M. S. Goodwin
S. R. Goodwin
T. J. W. Goodwin
J. Connolly (retired 31st March, 2023)
B. R. E. Goodwin
N. Brown
J. E. Kelly (Non-Executive Director)
The Chairman and the Managing Directors do not retire by rotation.
No Director has a service agreement with the Company, nor any direct beneficial interest in the share capital of any
subsidiary undertaking. The Chairman does not have any other significant external appointments.
Shareholdings
The Company has been notified that as at 3rd August, 2023, the following had an interest in 3% or more of the issued share
capital of the Company:
J. W. and R. S. Goodwin 2,178,133 shares (29%), J. W. and R. S. Goodwin 1,509,084 shares (20.10%). These shares are
registered in the names of J. M. Securities Limited and J. M. Securities (No. 3) Limited respectively. J. H. Ridley 501,709
shares (6.68%), Rulegale Nominees Limited (JAMSCLT) 394,064 shares (5.25%).
In line with LR 9.2.2AD R (1), relating to Controlling Shareholders, the Company confirms that a written and legally binding
agreement is in place, and has complied with the independence provisions set out in LR 6.5.4 R. The Company confirms that,
as far as it is aware, the controlling shareholders have complied with the agreement.
The percentages above take into consideration the 180,000 reduction in shares, with the total number of shares in issue
being 7,509,600 at the date of signing the financial statements.
Share capital
The Company’s issued share capital comprises a single class of share capital which is divided into ordinary shares of 10p
each. Information concerning the issued share capital in the Company is set out in note 27 to the financial statements on
page 81.
All of the Company’s shares are ranked equally and the rights and obligations attaching to the Company’s shares are set out
in the Company’s Articles of Association, copies of which can be obtained from Companies House in England and Wales or
by writing to the Company Secretary. The Directors of the Company do not have any on-going powers in relation to the
purchase of its own shares and there are no restrictions on the voting rights of shares and there are no restrictions in their
transfer other than:
•
certain restrictions as may from time to time be imposed by laws and regulations (for example, insider trading laws); and
•
pursuant to the Market Abuse Regulation whereby Directors of the Company require approval to deal in the Company’s
shares.
Additionally, the Company is not aware of any agreements between shareholders of the Company that may result in
restrictions on the transfer of ordinary shares or voting rights, and further details on the recent tender offer can be found within
note 31 on page 90.
22
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS (continued)
Research and development
The
Group
invests
significantly
in
research
and
development,
and
for
the
year
ending
30th
April,
2023
the
majority of development occurred within Dupré Minerals. In addition to ongoing development of the revolutionary fire
extinguishing agent for lithium-ion battery fires, known as AVD, Dupré has also been working on a new high performance fire
blanket, specifically designed for fires involving devices incorporating lithium-ion batteries. Other development projects in the
Group include enhancing our submersible slurry pump range to include a hydraulically driven variant, as well as the ongoing
advancement of casting methodologies to obtain improved mechanical properties at the same time as maintaining efficiency
in terms of manufacturability.
Change in control
The Group’s committed loan facilities include a change of control clause, which states that a change of control of the parent
Company will be classed as an event of default and would enable the providers at their discretion to withdraw the facilities.
Stakeholders relations
All shareholders are encouraged to participate in the Company’s Annual General Meeting. With the exception of the General
Meeting on 30th May, 2023, in respect of the tender offer, no shareholder meeting has been called to discuss any business
other than ordinary business at the Annual General Meeting.
The Board complies with the recommendations of the UK Corporate Governance Code that the notice of the Annual General
Meeting and related papers should be sent to shareholders at least twenty working days before the meeting.
The Directors attend the Annual General Meeting. The Chairman and other members of the Board and the Chair of the Audit
Committee and Audit Committee members will be available to answer questions at the forthcoming Annual General Meeting.
In addition, proxy votes will be counted and the results announced after any vote on a show of hands.
The Chairman ensures that the views of shareholders are communicated to the Board as a whole, ensuring that Directors
develop an understanding of the views of shareholders. Any individual requests for information from shareholders are dealt
with by the Chairman, and where any such requests are subject to restraint in that where any disclosure would give rise to
share price sensitive information, then the requests would be declined, or referred to the Board for release to all shareholders
through the Stock Exchange.
Engagement with the Group’s suppliers, customers and other stakeholders can be found within the Strategic Report on
pages 15 to 17.
Going concern
The Directors, after having reviewed the projections and possible challenges that may lie ahead, believe that there is a
reasonable expectation that the Group has adequate resources to continue in operational existence for at least twelve
months from the date of approval of these financial statements, and have continued to adopt the going concern basis in
preparing the financial statements.
As at 30th April, 2023, the Group’s gearing ratio stood at 26.3% (2022: 25.8%) against a substantial shareholders’ net worth
of £125 million (2022: £115 million). The retained reserves of the Group put it in a strong position to deal with unforeseen
material adverse issues.
The Group has continued to incur high energy costs throughout the financial year, but it has been able to manage the
increases in costs. With the measures already put in place, together with the continued monitoring of the energy costs
incurred, we do not see the impact of energy costs giving rise to a going concern issue. Furthermore, the fact that it is Group
policy to manufacture and sell products with high technology and high gross margins assists in insulating the Group from
high energy costs.
Within our severe but plausible stress test model, it is demonstrable that the Group has sufficient funds, after the share buy-
back transaction, to cover the Group’s and the Company’s financial commitments during the forecast period whilst remaining
compliant with its financial covenants. The stress test model starts with the forecasts generated by the subsidiary directors
and reflects their specific knowledge of the market conditions, strategy and outlook. Each of these subsidiary level forecasts
is then reviewed, challenged and approved by the relevant Group Managing Director who themselves are immersed in each
of the businesses. The stress test model then predicts the impact of a severe but plausible reduction in the pre-tax profit
forecast by reducing revenues by 18% without adjusting downwards the capital expenditure programme, maintaining the
overheads at their current expected levels and keeping the financing facilities at the same amounts that were in place at year
end. The results of the stress test modelling did not highlight any going concern issues, breaches of covenants or
requirements for any further financing facilities.
Whilst our carrying values of trade debtors and contract assets are significant, we see little risk here in terms of recovery.
Where possible, we credit insure the majority of our debtors and our pre credit risk (work in progress), and for significant
contracts where credit insurance is not available, we ensure, where possible, that these contracts are backed by letters of
credit or cash positive milestone payments.
As discussed elsewhere within these accounts, the Mechanical Engineering order book remains high and the Refractory
Engineering segment continues to be buoyant.
The Directors are confident that the Group and Company will have sufficient funds to continue to meet their liabilities as they
fall due for at least twelve months from the date of approval of the financial statements and therefore have prepared the
financial statements on a going concern basis.
23
DIRECTORS’ REPORTS
REPORT OF THE DIRECTORS (continued)
Viability Statement
In accordance with provision 31 of the UK Corporate Governance Code the Directors have assessed the Group’s viability
over a three year period to 30th April, 2026.
While the Board has no reason to believe that the Group will not be viable over a longer period, the Board believes that a
three year review period is prudent, and provides the readers of the report with a sensible degree of confidence.
As part of the going concern review process we have considered the impact of plausible adverse events over an extended
period (two more years, taking the total review period to 30th April, 2026), where it predicted a severe but plausible reduction
in the pre-tax profit forecasts for each year. The plausible adverse event scenarios (using the same logic as outlined for the
stress test model within the going concern review section) have been modelled by reducing revenues by 18% each year from
the base case forecast without adjusting downwards the capital expenditure programme, maintaining the overheads at their
current expected levels and keeping the financing facilities at the same amounts that were in place at year end. The results
demonstrated that the Group did not breach any of its covenants and has sufficient financing facilities in place to deal with
these adverse events and given that a large proportion of the future capital expenditure is by definition discretionary, and that
overheads could be reviewed and changed accordingly, there is further confidence that a downturn will not impact on the
Group’s ability to deal with material adverse events.
The workload within the Mechanical Engineering segment remains high and so underpinning performance in the short to
medium term. The Directors are therefore able to confirm that they have a reasonable expectation that the Group will be able
to continue in its operations and remain financially viable over this extended period to 30th April 2026.
Corporate governance statement
The Company’s Corporate Governance Statement is set out on pages 25 to 27 and forms part of the Directors’ Report.
Financial Risk Management
The Group has in place risk management policies that seek to limit the adverse effects on the financial performance of the
Group by using various instruments and techniques, further details can be found within note 28 on page 81.
Auditor
In accordance with Section 489 of the Companies Act 2006 and the recommendation of the Board of Directors, a resolution is
to be proposed at the Annual General Meeting for the re-appointment of RSM UK Audit LLP as auditor of the Company.
Approved by the Board of Directors and signed on its behalf by:
T. J. W. Goodwin
7th August, 2023
Chairman
24
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT
Introduction
The Board comprises five Executive Directors and an independent Non-Executive Director; the Audit Committee comprises
the Non-Executive Director, who is the Audit Committee Chair, and three other members, the previous Chairman, the
previous Managing Director and the previous Company Secretary, all of whom had held their previous positions for twenty
seven years and so have very substantial knowledge and experience of the diversified Group’s people, product ranges and
the very diversified overseas markets in which the Group operates. The Board and the Audit Committee fulfil the roles
required for effective corporate governance and the Board considers that it has the right governance to execute its strategy to
achieve its objectives.
The Board has always felt that it should be recognised that what may be appropriate for the larger company may not
necessarily be so for the smaller company, a point raised previously in the Cadbury Code of Best Practice. Whilst conscious
of its non-compliance with certain aspects of the Code as detailed below, we do not believe that at this stage in the Group’s
development and circumstances it is appropriate to change its own operational or governance structure with the sole
objective of achieving compliance with the revised Code given that the Board’s current corporate governance strategy has
been accepted by a large majority of its shareholders. The Group's governance structure, as set out below, is a structured
system of rules and practices that shapes how the Company operates, whilst also remaining dynamic, in addition to providing
the Board and Directors the necessary oversight to review its progress against its strategic plan.
For the past eight years the Company has had one Non-Executive Director who is also the Chair of the Audit Committee,
which has three other members as described above. This is not in full compliance with the Code, but for a smaller company,
due to the limits of time, availability and cost, the Board considers this as an
optimum compromise that is beneficial to shareholders and the Group’s long-term interests. For specific independent
expertise the Board engages independent consultants.
Compliance statement under the UK Corporate Governance Code 2018
The Company is required to report on compliance throughout the year. In relation to all of the provisions except those
mentioned below, the Company complied throughout the year.
As noted in the introduction above, the Group does not comply with aspects of the Code’s requirements under provisions 11
and 13 and provision 12 in terms of having a senior independent Director. Since 14th April, 2015 a Non- Executive Director
with the role of Chair of the Audit Committee has been appointed. The Group does not have a Remuneration Committee or a
Nominations Committee as required under provisions 10, 17, 23, 24, 32, 33, 36 and 41. Contrary to provision 36, the
company does not have a formal policy for post -employment shareholding requirements as it does not have any unvested or
un-exercised vested share options in existence.
The roles of the Chairman in running the Board and the Managing Directors in running the Group’s businesses are well
understood. It is not considered necessary to have written job descriptions. This is contrary to provision 14. In the best
interests of the Company it has been concluded that an independent Chairman is not necessary when considered with the
Company’s investor profile, thereby the company does not comply with Provision 9 of the Code.
The Chairman and Managing Directors do not retire by rotation, which is contrary to provision 18 of the Code and as required
by Provision 7, the Board has a conflicts of interest policy which includes a procedure for disclosure and review of any
potential conflicts and, if appropriate, approval by the Board. The shareholding of the executive directors is not considered a
conflict in interests due to their contribution to the long-term sustainable success of the Group being aligned with its other
shareholders.
The Code is available to view on the website of the Financial Reporting Council at www.frc.org.uk
The Board
During the year, the Board met formally nine times, and details of attendees at these meetings are set out below:
M. S. Goodwin
…
…
…
…
…
9 out of 9 attended
S. R. Goodwin
…
…
…
…
…
9 out of 9 attended
T. J. W. Goodwin …
…
…
…
…
9 out of 9 attended
J. Connolly (retired 31st March, 2023)
…
7 out of 9 attended
B. R. E. Goodwin …
…
…
…
…
9 out of 9 attended
N. Brown
…
…
…
…
…
…
9 out of 9 attended
J. E. Kelly
…
…
…
…
…
…
8 out of 9 attended
The Chairman and Managing Directors do not retire by rotation. With this exception, all Directors retire at the first Annual
General Meeting after their initial appointment and then by rotation at least every three years, which is contrary to provision
18 of the Code.
The Board retains full responsibility for the direction and control of the Group and continually monitors and assesses the
culture to ensure that it is aligned with the Group's purpose, values and strategy. With the culture of the Group being well
established there have not been any specific actions taken in the year other than continuing to lead by example and
encouraging open communication, transparency and respect. Whilst there is no formal schedule of matters reserved for the
Board, all acquisitions and disposals of assets, investments and material capital-related projects are, as a matter of course,
specifically reserved for Board decision, but referred to the Audit Committee for comment.
The Board meets regularly to discuss corporate strategy; to formulate and monitor the progress of business plans for all
subsidiaries and to identify, evaluate and manage the business risks faced. The management philosophy of the Group is to
operate its subsidiaries on an autonomous basis, subject to overall supervision and evaluation by
25
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT (continued)
The Board) (continued)
the Board, with formally defined areas of responsibility and delegation of authority. The Group has formal lines of reporting in
place with subsidiary management meeting with the Board on a regular basis. Regular informal meetings are also held to
enable all members of the Board to discuss relevant issues with local management and staff at the business units. This is in
addition to the flat structure in place and the hands-on approach of the
Directors, which is how the Board continually assesses emerging risks. Following the identification of an emerging risk the
Board dynamically sets out a plan and typically appoints an individual with the necessary skill set, whether they be internal or
external, to either manage or mitigate the risk.
The Audit Committee
The Audit Committee is made up of the following: J.E. Kelly (Chair), J.W. Goodwin, R.S. Goodwin and P. Ashley and the Audit
Committee reports to the Board. The Audit Committee has met formally eight times since the issue of the Annual Report for
the year ended 30th April, 2022, with all members attending each meeting. The responsibility of the Audit Committee is
explained in the Audit Committee Report on pages 28 to 31. The Audit Committee takes into account the Company’s
corporate Mission Statement, Objectives and Strategy, and reviews investor correspondence and comments, regulatory
changes, current issues and market trends. The Audit Committee uses expert opinion where considered appropriate.
Board evaluation
The Managing Directors, Chairman and Audit Committee address the development, composition, diversity and training
needs of the Board as a whole. An evaluation of the effectiveness and performance of the Board and the Directors of
subsidiaries has been carried out by the Managing Directors, Chairman and Audit Committee, by way of personal
discussions and individual performance evaluation. As the Managing Directors and the Chairman are executive Directors,
which in addition to there not being defined performance obligations that individuals are assessed against, the Group does
not comply with provision 13 of the UK Corporate Governance Code. Furthermore, as the Chair does not individually assess
and or act on the results of the evaluation, the Group does not comply with provision 22. The Board recognises the
importance of its composition and diversity and remains committed to suitable corporate governance and believes that a
wide range of knowledge, skills and experience are among the essential drivers to long-term success. We continue to
evaluate the composition of the Board and recognise the value that non- executives typically offer, by ensuring that the Board
is acting in the best interests of the Company. The Board considers the value offered in this circumstance is significantly less
as the Executive Directors, who form part of the controlling concert party, are, in essence, custodians of the business,
resulting in their interests being the long -term growth and success of the business. Furthermore, the Board would lose its
dynamic management of the business that over the history of the Group has enabled it to vastly outperform the FTSE 100
and FTSE 250, see page 33 for details. Additionally, when consideration is also given to the recommended tenure of non-
executives, the benefit of any new non-executives is limited by the fact that it would take a significant amount of time to
understand the vastly diverse and extremely technical products that the Group supplies.
The structure of the Board and its Audit Committee brings balance, astute guidance and deep understanding of the business
at both operational and Board level.
All Directors have reasonable access to the Company Secretary and to independent professional advice at the Company’s
expense.
External audit
The external auditor is appointed annually at the Annual General Meeting. The Board, following review and
recommendations received from the Audit Committee, considers the appointment of the auditor, and assesses on an annual
basis the qualification, expertise, cost and objectivity of the external auditor. The auditor's independence is safeguarded by
the Group following its policy and procedure on non-audit services. The policy recognises that certain material or highly
sensitive non-audit services may not be carried out by the external auditor, such as valuations or advisory services. In
addition to the auditor having their own policies and checks, the Audit Committee monitors the level of non-audit services
provided to the Group by the external auditor to ensure that their independence is not compromised.
The effectiveness of the external audit is assessed annually, following completion of the audit. Following discussions with all
parties involved in the audit on an operational level, the Board discusses on the efficiency and performance of the overall
audit. This is then discussed with the Audit Committee which evaluates the effectiveness of the audit process. Any suggested
improvements in audit processes from the prior year are reported back to the Board and the auditor partner so that they can
be taken into account when planning the audit for following year.
Disclosure of information to auditor
The Directors who held office at the date of approval of this Corporate Governance Report confirm that, so far as they are
each aware, there is no relevant audit information of which the Company’s auditor is unaware; and each Director has taken
all the steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit
information and to establish that the Company’s auditor is aware of that information.
Internal control and risk management
The Board has overall responsibility for the Group’s systems of internal controls and risk management which are designed to
manage rather than eliminate risk and provide reasonable reassurance against material misstatement or loss.
26
DIRECTORS’ REPORTS
CORPORATE GOVERNANCE REPORT (continued)
The Board has primary responsibility for controlling: operational risks; financial risks including funding and capital spend;
compliance risks; and political risks. The Audit Committee has been delegated responsibility for reviewing corporate
reporting, financial risk management and to regularly review the effectiveness of the Group’s internal controls together with
consideration of any reports from the external auditor. The Audit Committee Report is on pages 28 to 31. Except as noted
within this Corporate Governance Report, the Board confirms that the internal control systems comply with the UK Corporate
Governance Code.
The Group’s main systems of internal controls include regular visits and discussions between Board Directors and subsidiary
management, in-house General Counsel, health and safety committee and the Group Internal Auditor, on all aspects of the
business including financial reporting, risk reporting and compliance reporting. In addition, there is Board representation with
Goodwin PLC Directors on the boards of the subsidiaries. Any concerns are reported to the members of the Audit Committee
and to the Board. The Group maintains a risk register, has business continuity programmes and has insurance programmes
that are all regularly reviewed. These procedures have been in place throughout the year and are ongoing to endeavour to
ensure accordance with the FRC publication ‘Risk Management, Internal Control and Related Financial and Business
Reporting’. The Board considers that the close involvement of Board Directors in all areas of the day to day operations of the
Group’s business, including considering reports from management and discussions with senior personnel throughout the
Group, represents the most effective control over its financial and business risks system, by providing an ongoing process for
identifying, evaluating and managing the principal risks faced by the Group. In particular, authority is limited to Board
Directors in key risk areas such as treasury management, capital expenditure and other investment decisions.
The close involvement of Board Directors in the day to day operations of the business ensures that the Board has the
financial and non-financial controls under constant review and so it is not currently considered that formal Board reviews of
these controls would provide any additional benefit in terms of the effectiveness of the Group’s internal control systems. This
is contrary to provision 29 of the UK Corporate Governance Code.
The Board recognises the importance of an effective internal audit function to assist with the management and review of
internal controls and business risk. The Group's internal auditor continues to make good progress reviewing internal controls,
procedures and accounting systems, though it is planned that the activity of the Group internal auditor is expanded, going
forward, by the addition of an experienced assistant. During Covid-19, many more Group directors, management
accountants and employees became much more proficient in using
Zoom. This has, to some extent, improved the level of coverage but it is a fact of life that the best results of internal audit are
achieved by site visits. The Board of Directors and Senior Management will continue to have close involvement on a day to
day operational basis and the scope and results of internal audit work to be performed will be kept under review in the coming
year.
The Board considers that certain functions are best carried out by independent external bodies with specific expertise, who
then report to the Board directly or through the Audit Committee.
The Board confirms that it has not been advised of any material failures or weaknesses in the Group’s internal control
systems.
Approved by the Board of Directors and signed on its behalf by:
T. J. W. Goodwin
7th August, 2023
Chairman
27
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT
The key role of the Audit Committee is to provide confidence in the integrity of the Group’s financial risk management, internal
financial controls and corporate reporting. The Audit Committee, as empowered by the Group’s Board of Directors, has
responsibility for:
a)
Reviewing and checking the Group’s full year and half year Accounts and the Annual Report, as presented to the Audit
Committee.
b)
Reviewing the Group’s financial and non-financial internal controls and risk management systems and commenting on
whether they are relevant and effective.
c)
Making recommendations to the Group’s Board of Directors on the appointment and remuneration of the Group’s external
auditor; ensuring independence and objectivity of the auditor; the effectiveness of the audit process; and that the Group
receives value for money from the audit and that no non-audit services are carried out by the auditor.
d)
Reviewing comments and feedback brought to its attention by Directors or other employees of the Group.
e)
Reviewing and commenting to the Board on any significant investment plans of the Group.
f)
Reviewing the Group’s “whistle-blowing” procedures and reviewing any significant reports.
g)
Reviewing the scope of work for the internal audit function and the resultant reports.
h)
Reviewing significant accounting estimates and judgements relating to the financial statements with the external auditor
and members of the Board, and providing advice on whether the Annual Report and accounts as a whole are fair,
balanced and understandable.
i)
Reviewing and recommending climate-related policies.
The Audit Committee discharges each of its above responsibilities as follows:
1.
Examining the integrity of the Group’s Annual Report and half year Interim Report:
The Chair of the Audit Committee is an independent Non-Executive Director. The other members of the committee either
are persons with experience in the Group’s typical products and or markets or have vast historical knowledge of the
business and activities of the Group. This, together with their regular involvement in reviewing the Group’s financial
performance and accounts, provides sufficient recent financial experience. Regular meetings are held between members
of the Audit Committee, Directors of Goodwin PLC and its subsidiaries, General Managers and Senior Management of
the UK subsidiaries. Members of the Audit Committee are involved in regular discussions with the Directors, General
Managers and Senior Management of each subsidiary where the positions taken on subjective financial matters are
discussed. Each overseas subsidiary is normally visited at least once during the year by a member of the Audit
Committee, and / or by a Main Board Director, for meetings with the General Managers and Senior Management with
reports sent back to the Audit Committee. Flight and self-quarantining restrictions still applied to some of our overseas
subsidiaries during the year and use of Zoom has enabled regular meetings with them to continue. Where possible, travel
to and from some of those areas has recommenced. Any areas where the Audit Committee feels that the positions taken
within any particular subsidiary are either inappropriate or merit further review are discussed with the Board of Directors of
Goodwin PLC.
For the half year Interim Report, the Audit Committee reviews the financial and non-financial content, including the
Chairman’s Statement, and reviews the financial statements and qualitative notes of the financial statements, to help
ensure that they are balanced, relevant, appropriately compliant with relevant accounting standards/legislation, and are
consistent and complete. The Audit Committee discusses with the Board of Directors their views as to whether the half
year Interim Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for
shareholders to assess the Group’s half year performance. The figures in the half year Interim Report are not audited, but
the external auditor is given sight of these before publication.
For the full year Annual Report, the Audit Committee reviews the financial and non-financial content of the Group
Strategic Report, including the Chairman’s Statement; the Corporate Governance Report; the Directors’ Report; the
Directors’ Remuneration Policy and Report; and reviews the financial statements and the qualitative notes to the financial
statements to examine whether the content is fair, balanced, relevant, understandable, appropriately compliant with
relevant accounting standards / legislation and consistent and complete. The Audit Committee has discussed the full year
Annual Report and their views with the Group external auditor. The Audit Committee confirmed to the Board that in its
opinion the proposed Annual Report for the year ended 30th April, 2023 appropriately represents the Group’s trading
position and, taken as a whole, is fair, balanced and understandable and provides the information necessary for
shareholders to assess the Group’s full year performance, its position at the year end, and its objectives, strategy and
business model.
2.
Helping to ensure the Group carries effective and relevant financial and non-financial internal controls and
financial risk management systems:
To assess the effectiveness of systems for internal financial controls, financial reporting and financial risk management,
the Audit Committee reviews reports from Main Board Directors on the Group’s subsidiaries; reviews reports from the
Group Chief Accountant; reviews reports from General Managers of the Group’s subsidiaries; reviews quarterly financial
reports; reviews reports from internal and external audit; requests and reviews reports from independent external
consultants; and reviews the Group’s risk register, business continuity programmes and levels of insurance.
28
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
2023 Audit Committee Risk Programme
The terms of reference for the Audit Committee and how it discharges its duties have been presented to the Board and
ratified.
Risk Management:
As a method of adding formality to the management of risk within all Group companies, Steven Birks, a former Goodwin
PLC Director, set up a framework to mentor each subsidiary in enhancing their risk analysis and controls. This framework
continues to be followed by Directors and general managers, and, when appropriate, the Audit Committee reviews the
status.
Having focused initially on overseas companies, all subsidiaries in the Group are now included in the risk analysis and
areas being scrutinised in detail, other than risks individual to each company, are:
a)
having appropriate limits of contract liability.
b)
having appropriate levels and types of insurance.
c)
ensuring appropriate control of cash flow and banking arrangements.
d)
ensuring health and safety continues to be given priority and that there is a progressive plan for improvement
e)
ensuring product development and life cycles are managed relative to the global market.
f)
ensuring that the provision of trained and skilled manpower is appropriately matched to the requirements of each
company.
g)
risk analysis and preventative measures associated with the installation and commissioning of new plant, modified
plant and new processes.
h)
review of progress on environmental (TCFD) and social matters.
As reported last year, our internal Group General Counsel set up and carried out a training programme for all Directors
and senior managers of the UK subsidiary companies to increase contract risk awareness, both for sales and purchases.
A start has now been made on rolling this training out to overseas subsidiaries.
In addition, training has been given to both UK and overseas subsidiary Directors and senior managers on sanctions and
export controls.
Training has also been provided to UK and overseas subsidiary Directors on Scope 1, Scope 2 and Scope 3 carbon
emissions.
The Audit Committee continues to review the effectiveness of Know Your Customer (KYC), credit insurance, political risk
insurance and contract terms and conditions. Gallagher as brokers for the Group’s insurance cover continue to review
policies in place, along with Board members, and report back to the Audit Committee.
Market risk
No customer accounts for more than 10% of the annual Group turnover. The country and sector dependency for the year
is shown by the charts on page 10.
Technical risk
The performance of new products issued to market always has a degree of risk until a multi-year track record has been
attained. This statement relates to all Group companies in both the Mechanical and Refractory Engineering Divisions.
Product failure / contract risk
This has been reviewed and is unchanged from that previously stated.
Financial risk
This has been reviewed and is as stated in previous years with the perceived increased volatility in exchange rates and
the possibility of high foreign exchange hedging costs for forward long-term contracts.
The Board, with the support of the Audit Committee, has reviewed the accounting treatment of the ten year interest rate
hedge that was taken out last year to protect the Group against the interest rate increases that have occured to date, in
addition to the anticipated increases expected over the coming years.
The Audit Committee has in conjunction with the Board reviewed the Group’s guaranteed banking facilities in terms of
quantum and tenure.
Regulatory compliance
The Audit Committee continues to monitor regulatory compliance, training and competency. The Committee continues to
review the impact on the Group of the Climate Change Act 2008 (2050 Target Amendment) Order 2019.
Human Resources
The age profile of senior managers and perceived skill gaps within each Group company continue to be reviewed by the
Audit Committee. Focus has been to ensure that the Group has sufficient accounting capacity and also on the recruitment
of quality and project managers in the light of the on-going business changes.
29
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
2.
Helping to ensure the Group carries effective and relevant financial and non-financial internal controls and
financial risk management systems: (continued)
Information Technology
During the year the Audit Committee continued to monitor the risks posed affecting information security and the steps
taken to minimise these. A comprehensive internal audit of the Group’s IT systems was completed during the year. Some
risks have been identified and a plan to address those risks is being devised and implemented.
Capital expenditure
The Audit Committee also reviews and comments to the Board on major capital purchases or company
acquisitions being proposed by the Board of a unit or linked value greater than £2 million. Gross proposed or actual capital
expenditure of all Group companies is also reviewed to help ensure the Board maintains awareness of how such
expenditure will affect the limits agreed to be in place at the time.
The Audit Committee has confirmed its view to the Board that in its opinion, the Group carries relevant internal controls
and risk management systems appropriate to minimise the perceived risks of the Group’s business.
3.
The Group’s external auditor
Following the last audit tender process RSM UK Audit LLP (“RSM”) was appointed as the Group’s Auditor at the
Company’s AGM in October 2020. Following shareholder approval at the Annual General Meeting in October 2022, RSM
was re-appointed as the Group’s Auditor for the year ended 30th April, 2023. In line with regulation, the audit will be put
out to tender at least every ten years. Subject to not bringing the tender forward, the Group will be required to re-tender
the audit in financial year 2029.
In addition to the auditor having their own policies and checks, to preserve objectivity and independence, the Audit
Committee has a policy that restricts the external auditor from carrying out any non-audit services during the year.
Throughout the year the Audit Committee monitors the level of non-audit services provided by RSM to the Group and
confirms that RSM did not provide any non-audit services to the Group during the year. The Company has, for many years
now, used a different accountancy practice to that of the statutory auditor for its UK tax services. To further assess both
objectivity and independence, the Audit Committee also takes into consideration any relationships between the Group
and the audit firm, the audit fee as a proportion of the overall fee income of the audit firm and whether the Group has
employed any former members of the external audit team.
The Audit Committee has met formally with the Group’s external auditor, RSM, to discuss the full year Annual Report, and
has met with and discussed matters with them as part of the audit process during the current financial year being reported
on. No material concerns were raised during these meetings or discussions.
The Audit Committee appraises the auditor’s effectiveness on an annual basis, through regular engagement with RSM
during the audit process, in addition to taking into account:
•
feedback from directors, senior managers and the Group Chief Accountant
•
the quality and scope of all key external auditor plans and reports
•
the delivery and performance against this plan
•
the behaviour, qualifications and performance of their audit team
•
RSM’s understanding of the Group’s business and industry sector
The Audit Committee was satisfied with the external auditor’s independence of the audit process.
4.
Reviewing comments and feedback
There is regular contact with Directors and employees where open and frank discussion is encouraged.
5.
Whistle-blowing Procedures
The Group has a whistle-blowing policy in place whereby employees can report any suspected misconduct or concerns,
either anonymously on a dedicated telephone line, or to the Chairman, the Company Secretary or the Chair of the Audit
Committee. Such calls are investigated and are reported to the Audit Committee. The Audit Committee has confirmed to
the Board that the Group’s whistle-blowing policy and procedures are appropriate.
6.
Internal Audit
The scope of internal audit has been set by the Audit Committee and the results reviewed.
The internal audit function operates a random rotation policy which prioritises based on materiality and endeavours to
cover all Group subsidiaries at least once within a three year cycle either via the Group Internal Auditor or by the
respective Group Managing Directors or members of the Audit Committee. Where possible travel to overseas
subsidiaries has now commenced through remote desk-top internal audits of our overseas subsidiaries have continued,
where the Covid-19 restrictions still applied during the year just completed. However, the larger profit earning overseas
subsidiaries, Noreva, Gold Star Powders India and Goodwin Pumps India have been subject to full statutory audit by
RSM Germany and India respectively.
30
DIRECTORS’ REPORTS
AUDIT COMMITTEE REPORT (continued)
7.
Accounting estimates and judgements relating to the Financial Statements
The Audit Committee again reviewed what it considered to be the accounting estimates and judgement areas within
the Group Annual Report for the year ended 30th April, 2023.
Consideration of the key and other estimates and judgements as disclosed in note 2 of the financial statements, as well
as:
•
Review of Group inter-company late payments;
•
Review of the Group’s gearing, control of capital investment and the financing of further green investment;
•
Review of overseas subsidiary company risk mitigation;
•
Review and management of the age profile across the Group;
•
Assessment of the banks’ credit ratings;
•
Review of Duvelco’s market potential and future profitability.
The Audit Committee also took account of the findings of RSM in relation to their external audit work for the year.
J. E. Kelly
7th August, 2023
Chair of the Audit Committee
31
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT
This report includes the Group’s Remuneration Policy for Directors and sets out the Annual Directors’ Remuneration Report.
Group’s Remuneration Policy for Directors
The Group’s policy in respect of Directors’ remuneration is to provide individual packages which are determined having due
regard to the Group’s current and projected profitability, the employee’s specific areas of responsibility and performance,
their related knowledge and experience in the Group’s specific fields of operation, the external labour market and their
personal circumstances whereby a package to remunerate and motivate the individual so as to best serve the Group is set.
The policy is designed to be simple and naturally aligned with the performance of the Group and its overall strategic objective
of growing the long-term profitability of the Group in a sustainable manner whilst delivering a fair return to its shareholders.
Consideration is given to the financial and non financial performance of the individual and how they have performed on
delivering against each of the Group’s strategy points, and the Group’s culture, purpose and values.
Individual salaries are also indirectly linked up and down to the time allocated and perceived effort by the Director to the
Group’s business. Many Directors, as indeed employees, put in hours of work way beyond what could be requested and
such personal devotion to duty by a Director is rewarded without formulae. All Board members have access to independent
advice when considered appropriate. In forming its policy, consideration has been given to the UK Corporate Governance
Code best practice provisions on remuneration policy, service contracts and compensation and has considered the
remuneration levels of Directors of comparative companies.
The remuneration policy for other employees is broadly based on principles consistent with the policy for Directors. Salary
reviews take into account Group performance as well as subsidiary performance, local pay and market conditions.
Whilst being aware of the requirements to show in graph form the breakdown of base pay, bonus pay, pension and long-term
benefits, the Group is unable to comply with this requirement as Directors are not paid in accordance with any specific
performance criteria or KPIs. Directors are paid based on their level of activity within the Group, their knowledge and
experience of the Group’s activities or similar, the performance of the Group versus market opportunity whilst also
considering the Director’s personal circumstances and the salary needed to ensure continuity of employment. This in itself
may result in decreases or increases in a Director's salary within any year as illustrated in the matrix below.
Element of
Purpose and
Operation
Maximum
Performance
Changes for
Pay
Link to Strategy
Targets
2022 / 2023
Salary
Reflects the Directors’
Reviewed
Generally in line
The Group’s
Directors set the
level of activity and
annually at the
with inflation and
performance,
base increase in
achievement within
anniversary of the
the wage / salary
good or bad, may
salaries. For the
the Group, their
previous salary
increase awarded
result in the salary
period May 2022
knowledge and
adjustment for
to employees, but
being changed.
to April 2023 the
experience of the
the individual
this is not rigid.
increase was
Company’s activities
Director.
generally 8.5%.
or similar, the
performance of the
Group versus market
opportunity, whilst
also considering the
salary needed to
ensure continuity of
employment.
Pensions
All Executive Directors
Monthly
Currently 3%
N/A
No changes.
are entitled to have 3%
payments
of gross
This policy
added to their gross
remuneration
was adopted
remuneration which,
in October 2013
by nature of salary
for the Directors
sacrifice, is put into a
and entire UK
pension scheme
workforce.
where they have direct
dealings with the
selected investment
fund provider.
Other benefits
Fully expensed car or
N/A
N/A
N/A
See details of the
cash alternative,
Directors’
health insurance or
emoluments on
other services.
page 36.
We believe the above meets the requirement of Schedule 8, Companies Act 2006, regarding the changes in 2022 / 2023.
The Policy and Report is signed by the Chairman and the Managing Directors.
32
DIRECTORS’ REPORTS
DIRECTORS’ REMUNERATION POLICY AND REPORT (continued)
Group’s Remuneration Policy for Directors (continued)
In any company there are specific individual circumstances that on occasions will merit special treatment in a given year for a
Director either to keep or look after the person, indeed no different than we may do for an employee. In the matrix of
remuneration for Directors you will note the Company has given itself flexibility to deal with specific circumstances which may
not even be able to be made public for confidentiality reasons of which there are many. However, bearing in mind the
performance of the Company over the past twenty years and more and that the Directors’ salaries are anything but excessive
versus the norm of other PLCs, this is the Board’s policy.
Total shareholder return – unaudited
For reference the TSR of Goodwin PLC versus the FTSE 100 and the FTSE 350 is shown below for not only the last five but
also the last ten years and the last twenty years.
TSR for last 5 Years
TSR for last 10 Years
TSR for last 20 Years
Goodwin
FTSE 100
FTSE 350
…
…
…
155%
27%
24%
…
…
…
131%
79%
80%
…
…
…
5,376%
320%
354%
As is required by the Listing Rules, we show in graph form both the salary of the Managing Director (CEO equivalent) of
Goodwin PLC and the TSR over the past ten years. We, however, do not list out the salary of the Financial Director of
Goodwin PLC versus the TSR as in Goodwin PLC we have a Group Chief Accountant who carries out 75% of the duties of a
Financial Director, but we do not have what would generally be known as a Financial Director. This is for the reason that
certain decisions that outsiders might consider are the sole responsibility of the Financial Director are not. In Goodwin PLC it
is a team effort and such decisions are made not only by the Group Chief Accountant but also by the Managing Directors and
the Chairman.
For confidentiality and flexibility reasons, the Board policy is not to disclose exit / termination payments to Directors but the
policy is to remain within the law, to fairly compensate good leavers and minimise payments to bad leavers. In the last ten
years, the Company has managed to avoid paying any termination payments to bad leavers. It is, however, Board policy to
limit termination payments to a maximum of 100% of gross annual salary and should such amount be exceeded then it will be
reported in the Annual Report giving the reason why.
The Company takes seriously its responsibility for ensuring a fair deal between employees, shareholders, customers and the
local community and maintaining an appropriate balance.
The
Company
does
not
use
or
pay
any
external
advisers
or
consultants
for
remuneration
or
incentive
policy.
Shareholder engagement is by nature of the Annual Report, the Annual General Meeting and the votes therein.
Approval of the Company’s Directors’ Remuneration Policy
The Company put the Remuneration Policy to the vote at the Annual General Meeting on 5th October, 2022, when it was
passed by 99.94% of those who voted. The Company will be putting the Remuneration Policy to the vote again in 2026, which
is three years from the last vote, as is required by the Listing Rules.
33
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report
This report is submitted in accordance with the Directors’ Remuneration Report Regulations.
Consideration by the Directors of matters relating to Directors’ remuneration
The Company’s Remuneration Policy for Directors, including remuneration of its non-executive, is set by the Board as a
whole and is described in pages 32 to 33 therein. The Policy has been followed in the financial year to 30th April, 2023 and
will be followed in the next financial year.
The Board of Directors are also the key management personnel as defined in IAS 24.
Service contracts
None of the Directors has a service contract. A Director may resign at any time by notice in writing to the Board. There are no
set minimum notice periods but all Directors other than the Chairman and Managing Directors are subject to retirement by
rotation and as employees also have notice periods in accordance with law. No compensation as of right is payable to
Directors on leaving office.
Relative importance of spend on pay
The table below shows shareholder distributions and total employee expenditure, and the percentage change in both:
2023
2022
£’000
£’000
%
Ordinary dividends proposed in respect of the year (£’000)
…
…
…
…
8,636
8,289
4.2
Total employee costs (£’000)
…
…
…
…
…
…
…
…
…
50,075
44,745
11.9
Average employee numbers
…
…
…
…
…
…
…
…
…
1,144
1,112
2.9
Approval of the Company’s Annual Directors’ Remuneration Report
An ordinary resolution for the approval of the Annual Directors’ Remuneration Report will be put to shareholders at the
forthcoming Annual General Meeting. The Annual Directors’ Remuneration Report presented in the accounts to 30th April,
2022 was put to the shareholders at last year’s Annual General Meeting on 5th October, 2022. The Annual Directors’
Remuneration Report was accepted with 99.94% of proxy votes cast in favour.
Total shareholder return – unaudited
The following graphs compare the Group’s total shareholder return over the ten and twenty years ended 30th April, 2023 with
various FTSE indices. The graphs also show the change in the earnings of the previous Managing Director for the periods up
to 30th April, 2019.
The base earnings figure since 30th April, 2019 is the amount earned by each Managing Director.
2019
2020
2021
2022
2023
£’000
£’000
£’000
£’000
£’000
397
310
355
374
406
Total payroll costs, excluding the Managing Director’s salaries, have decreased by 12.0%. During the year, the initial base
increase awarded to employees in the UK companies was 5.3% followed by a further 3.2% being awarded later on in the
year. The following graphs have not been audited.
34
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
The increase in the Goodwin PLC share price since 2003 plus dividends re-invested would mean that £1.00 invested in 2003
by 30th April, 2023 would be worth £54.76. The increase in the share price since 2013 plus dividends re-invested would
mean that £1.00 invested in 2013 would at 30th April, 2023 be worth £2.31.
35
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
The auditor is required to report on the following information contained in this section of the Annual Directors’ Remuneration
Report.
Directors’ interests in the share capital of the Company as well as ex Directors – audited
The interests of the Directors in the share capital of the Company at the beginning and end of the financial year
were as follows:
Beneficial
M. S. Goodwin
…
…
…
…
…
…
69,054
69,265
S. R. Goodwin
…
…
…
…
…
…
78,786
78,978
T. J . W. Goodwin…
…
…
…
…
…
118,926
122,334
J. Connolly (retired 31st March, 2023)
…
…
28,802
28,802
B. R. E. Goodwin …
…
…
…
…
…
54,536
59,189
N. Brown …
…
…
…
…
…
…
445
445
J. W. Goodwin*
…
…
…
…
…
…
52,041
71,866
R. S. Goodwin*
…
…
…
…
…
…
21,670
33,236
J. W. Goodwin* and R. S. Goodwin*
…
…
2,154,009
2,129,153
J. W. Goodwin* and R. S. Goodwin*
…
…
1,492,036
1,457,358
Non-beneficial
J. W. Goodwin* and E. M. Goodwin
…
…
14,166
14,166
* Audit committee member / ex Director.
Details of individual emoluments and compensation – audited
Single Total Figure Table
Salary
Benefits
Non-Exec
Pension
Total
in kind
Director’s
contrib-
fees
utions
Year ended
2023
2023
2023
2023
2023
£’000
£’000
£‘000
£’000
£’000
M. S. Goodwin
…
…
…
…
…
…
…
399
5
-
2
406
S. R. Goodwin
…
…
…
…
…
…
…
399
5
-
2
406
T. J. W. Goodwin …
…
…
…
…
…
…
280
5
-
8
293
J. Connolly…
…
…
…
…
…
…
…
238
1
-
7
246
B. R. E. Goodwin …
…
…
…
…
…
…
256
5
-
8
269
N. Brown
…
…
…
…
…
…
…
…
184
11
-
6
201
J. E. Kelly
…
…
…
…
…
…
…
…
-
-
78
-
78
Total
…
…
…
…
…
…
…
…
1,756
32
78
33
1,899
Single Total Figure Table
Salary
Benefits
Non-Exec
Pension
Total
in kind
Director’s
contrib-
total
fees
utions
Year ended
2022
2022
2022
2022
2022
£’000
£’000
£’000
£’000
£’000
M. S. Goodwin
…
…
…
…
…
…
…
360
3
-
11
374
S. R. Goodwin
…
…
…
…
…
…
…
360
3
-
11
374
T. J. W. Goodwin …
…
…
…
…
…
…
259
3
-
8
270
J. Connolly …
…
…
…
…
…
…
…
270
2
-
8
280
B. R. E. Goodwin …
…
…
…
…
…
…
233
3
-
7
243
N. Brown
…
…
…
…
…
…
…
…
167
11
-
5
183
J. E. Kelly
…
…
…
…
…
…
…
…
-
-
72
-
72
Total
…
…
…
…
…
…
…
…
1,649
25
72
50
1,796
Benefits in kind consist of the provision of a fully expensed car, a cash alternative scheme, healthcare insurance or other
services. The employer’s national insurance costs relating to the Directors’ remuneration amounted to £250,000 (2022:
£222,000).
36
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Pay Comparison – audited
In accordance with the remuneration regulations, we are including in the report a table comparing the annual change of each
Director’s pay with that of the average employee’s pay. This is required over a rolling five year period, but as the requirements
came into effect for financial years ending 2021, the table below will only show the comparison from 30th April, 2020.
Annual Percentage Change of Average Remuneration
2022 / 2023
2021 / 2022
2020 / 2021
of each Director
%
%
%
M. S. Goodwin
…
…
…
…
…
…
…
…
8.5**
5
15*
S. R. Goodwin
…
…
…
…
…
…
…
…
8.5**
5
15*
T. J. W. Goodwin …
…
…
…
…
…
…
…
8.5
5
32*
J. Connolly (retired 31st March, 2023)
…
…
…
…
0
0
16
B. R. E. Goodwin …
…
…
…
…
…
…
…
10.4
10
42
N. Brown (appointed 11th December, 2020)
…
…
…
10
N/A
N/A
J. E. Kelly …
…
…
…
…
…
…
…
…
8.5
6
9
UK Base Increase Awarded to Employees
…
…
…
8.5
Any increases greater than the UK average employee % change are a reflection of the further development of individual
Directors in the areas of their new responsibilities. It should be noted in 2023, M. S. Goodwin and S. R. Goodwin total
remuneration has increased inline with the UK base increase but the reallocation of pension contribution has resulted in the
average % increase of their salary and benefits in kind increasing by 11.2% compared to last year.
*
The above increases are in relation to the appointment of M. S. Goodwin, S. R. Goodwin and T. J. W. Goodwin as
Mechanical Divisional Managing Director, Refractory Divisional Managing Director and Group Chairman respectively.
**
It should be noted in 2023, that the percentage for M. S. Goodwin and S. R. Goodwin is higher due to the changes in
their pension contributions which affect these figures.
Average % Increase of the UK Workforce
As required to be disclosed by the remuneration regulations, the average ‘mean’ pay of the UK workforce has increased by
9.6%, which takes into account salary, bonuses and benefits in kind and is based on all individuals employed by Goodwin
PLC and its UK subsidiaries. The increase is a factor of the pay increases awarded in the year, as well as the business
needing to employ individuals with a greater and wider skillset as the Group takes
on more technical work.
2022 / 2023
2021 / 2022
2020 / 2021
%
%
%
UK workforce average % Increase ……………
9.6
5
3
Pay Ratio of Managing Directors
In accordance with the Pay Ratio Regulations we are disclosing the comparison of our Managing Directors’ pay with that of
our average UK employees. It is appropriate that the Managing Directors’ pay was used in the comparison as we do not have
what is generally known as a Chief Executive Officer.
For the year ended 30th April, 2023 the pay for both the Managing Directors in the Single Total Pay Figure table is the same.
If the figures are different in any subsequent year, the higher of the two figures will be used in the ratio pay comparison
section.
The tables below show our Managing Directors’ pay ratio at the 25th, median and 75th percentile of our UK employees as at
30th April, 2023:
Financial
Method
25th
Median
75th
Year
percentile
pay ratio
percentile
pay ratio
pay ratio
2023 FTSE 350
-
44:1
-
2023 ratios
Option A
14:1
11:1
8:1
2022 ratios
Option A
14:1
11:1
8:1
2021 ratios
Option A
14:1
11:1
8:1
2020 ratios
Option A
12:1
10:1
7:1
37
DIRECTORS’ REPORTS
DIRECTORS REMUNERATION POLICY AND REPORT (continued)
Annual Directors’ Remuneration Report (continued)
Pay Ratio of Managing Directors (continued)
Financial
Managing
25th
Median
75th
Year
Directors
percentile
pay
percentile
£’000
pay
£’000
pay
£’000
£’000
2023 Total Pay
406
29
38
52
2022 Total Pay
374
27
34
48
2021 Total Pay
355
26
33
45
2020 Total Pay
333
26
33
45
Notes:
1.
Total pay has been calculated for each employee and, where applicable, prorated to calculate full-time equivalent pay.
It includes payments that are taxable plus any employer pension contributions.
2.
We offer competitive and fair rates of pay for all our UK employees taking into account personal circumstances.
3.
We have opted for Option A of the pay ratio regulations as this is the preferred option under the regulations and also
provides the most accurate data.
4.
The above figures are based on the total pay as at 30th April, 2023.
Equity Long Term Incentive Plan (LTIP) – Vested Share Options – audited
All share options under the Equity Long-Term Incentive plan (LTIP) for the Executive Directors, that was approved at the
Annual General Meeting on 5th October, 2016, have now been exercised and the Company has no follow-on LTIP incentive
plans in place or proposed. The Company does not have a formal policy for post-employment shareholding requirements,
and contrary to provision 37 of the UK Corporate Governance Code, the Company does not have the ability to recover and /
or withhold sums or share awards in relation to the vested share options. The shares vested as part of the above scheme
further align the executive directors with the long-term interests of the shareholders, as do their not insignificant
shareholdings already held.
Total pension entitlements – unaudited
In line with the Government’s requirements the Group administers a pension scheme for all UK employees including
Directors. Under this Auto Enrolment Pension arrangement each Director is entitled to have an amount of 3% of gross
remuneration paid into a pension scheme where they have direct dealings with the selected investment fund provider. The
employee also contributes a minimum of 4% of remuneration to their fund. The pension contributions are to defined
contribution pension schemes which are independent of the Company.
The Company has no obligations to make any payments in relation to pensions when a Director leaves service by nature of
removal from office, resignation or retirement.
The Annual Directors’ Remuneration Report was approved by the Board on 7th August, 2023 and is signed on its behalf by:
T. J. W. Goodwin
M. S. Goodwin
S. R. Goodwin
Director
Director
Director
38
DIRECTORS’ REPORTS
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL
REPORT AND THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Strategic Report and the Report of the Directors, the Directors’ Remuneration
Report, the separate Corporate Governance Statement and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. The
Directors have elected under company law and are required under the Listing Rules of the Financial Conduct Authority to
prepare Group financial statements in accordance with UK-adopted International Accounting Standards. The Directors have
elected under company law to prepare the Company financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).
The Group financial statements are required by law and UK-adopted International Accounting Standards to present fairly the
financial position and performance of the Group; the Companies Act 2006 provides in relation to such financial statements
that references in the relevant part of that Act to financial statements giving a true and fair view are references to their
achieving a fair presentation.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and the Company and of the profit or loss for that period. In preparing each of
the Group and Company financial statements, the Directors are required to:
a.
select suitable accounting policies and then apply them consistently;
b.
make judgements and estimates that are reasonable and prudent;
c.
for the Group financial statements, state whether they have been prepared in accordance with UK-adopted
International Accounting Standards;
d.
for the Company financial statements, state whether they have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
e.
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and
the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the
Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the
Companies Act 2006. They are responsible for safeguarding the assets of the Group and the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
Directors’ statement pursuant to the Disclosure and Transparency Rules
Each of the Directors, whose names are listed on page 22, confirm that to the best of each person’s knowledge:
a.
the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation
taken as a whole; and
b.
the Strategic Report contained in the Annual Report includes a fair review of the development and performance of the
business and the position of the Company and the undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Goodwin PLC website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
T. J. W. Goodwin
M. S. Goodwin
S. R. Goodwin
Director
Director
Director
7th August, 2023
39
INDEPENDENT AUDITOR’S REPORT
to the members of Goodwin PLC
Opinion
We have audited the financial statements of Goodwin PLC (the ‘parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 30 April 2023 which comprise the Consolidated Statement of Profit or Loss, Consolidated
Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, Consolidated Balance Sheet,
Consolidated Statement of Cash Flows, Company Balance Sheet, Company Statement of Changes in Equity and
notes to the financial statements, including significant accounting policies. The financial reporting framework that
has been applied in the preparation of the Group financial statements is applicable law and UK-adopted
International Accounting Standards. The financial reporting framework that has been applied in the preparation of
the parent Company financial statements is applicable law and United Kingdom Accounting Standards including
Financial Reporting Standard 101 "Reduced Disclosure Framework", (United Kingdom Generally Accepted
Accounting Practice).
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s
affairs as at 30 April 2023 and of the Group’s profit for the year then ended;
•
the Group financial statements have been properly prepared in accordance with UK-adopted International
Accounting Standards;
•
the parent Company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the Group and parent Company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed public interest entities and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters
Group
Revenue recognition – revenue recognised over time
Intangible assets – capitalisation and impairment
Parent Company
No key audit matters noted
Materiality
Scope
Group
Overall materiality: £778,000 (2022: £715,000)
Performance materiality: £583,000 (2022: £536,000)
Parent Company
Overall materiality: £430,000 (2022: £425,000)
Performance materiality: £322,500 (2022: £318,000)
Our audit procedures covered 80% of revenue, 92% of total assets and 74%
of absolute profit before tax.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the Group and parent Company financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the
greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the Group and parent
40
Company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Revenue recognition – Revenue recognised over time
Key audit matter description
Refer to accounting policies in note 1, accounting estimates and
judgements in note 2 and note 4.
Revenue underpins the key measures of performance of the Group.
As a profit-oriented business, we considered the risk of fraud in the
recognition of revenue. We identified that there was a heightened risk of
misstatement around the year end through inappropriate application of
the Group’s revenue recognition policies and revenue transactions being
recognised in the wrong period.
The Group has contracts with customers under which revenue is
recognised over time. Revenue recognised in the year on these contracts
amounted to £79,998,000.
Estimates are made by management based on work completed for each
contract and costs to complete.
Revenue is recognised with an associated adjustment made to cost of
sales to adjust the level of profits recognised on the contract to be in line
with the percentage stage of completion.
Associated contract assets, liabilities and work in progress are recognised
where applicable on these contracts.
There is a risk that revenue could be misstated through:
- inappropriate application of the Group’s revenue recognition policies;
- the high level of estimation uncertainty in recognising revenue on over
time contracts; or
- modifications in contractual arrangements, such as variations and
settlements of claims.
How the matter was addressed
in the audit
We assessed whether revenue was recognised in line with the Group’s
revenue recognition policies and IFRS 15 ‘Revenue from contracts with
customers’.
We undertook tests of details on contracts that have been completed in the
year and those open at the year end.
We considered management's estimates of the stage of completion for
open contracts at the period end, substantively testing supporting
schedules, including verification of contractual terms. We challenged
management on the key assumptions and variances identified and
reviewed historical budgeting accuracy.
For all contracts selected we tested the associated contract assets and
contract liabilities.
The Group reached a settlement for additional revenue on a contract
during the year. We checked the associated adjustments to revenue were
appropriate for the period through our contract testing procedures. We
reviewed the disclosures associated with revenue recognition.
Key observations
In concluding our audit, we identified misstatements in excess of the
trivial threshold relating to revenue contracts. Where misstatements
were identified, we reported these to those charged with governance and
certain adjustments were recorded by the management. The remaining
unadjusted misstatements relating to revenue contracts were below
overall materiality.
The combination of revenue contract adjustments with other
accumulated unadjusted misstatements resulting from the group audit
was a large proportion of, albeit below, our overall materiality. These
adjustments, if corrected would serve to increase reported profit for the
period.
41
Intangible assets – capitalisation and impairment
Key audit matter description
Refer to accounting policies in note 1, accounting estimates and
judgements in note 2 and note 15.
The Group has various intangible assets including goodwill, brand names,
intellectual property, manufacturing rights and development costs. These
assets form part of the Group’s cash generating units (CGUs).
The performance of each CGU varies and the actual or expected
performance of each could impact the carrying value of the Intangible
assets within the CGU.
The Group has incurred expenditure on development of new products in
the year. As certain projects have moved towards production, there has
also been capital expenditure on plant and equipment. Amounts are
capitalised if criteria are met in accordance with IAS 38 'Intangible assets'
and IAS 16 ‘Property, plant and equipment’
The viability of and market for new products is not guaranteed.
Judgement is required in considering this and appropriate disclosures
should be made in the financial statements.
How the matter was addressed
in the audit
We assessed the appropriateness of capitalisation of development costs
and capital expenditure in a new CGU due to the impact on reported
earnings. We challenged the judgements made in assessing whether the
IAS 38 criteria for capitalisation had been met.
We obtained management’s impairment model for their CGUs, including
Goodwill and undertook audit procedures including:
•
Assessing whether management's calculations comply with the
requirements of IAS 36 ‘Impairment of assets’;
•
Analysing the structure and integrity of the model and the
mathematical accuracy;
•
Challenging the main forecasting assumptions used in the value-
in-use calculations which included expected revenues, margin and
the discount rate;
•
Performing
sensitivity
analysis
in
assessing
the
risks
of
impairment;
• Corroborating assumptions through discussions with operational
management; and
• Review of the disclosures in the financial statements.
We considered the amortisation accounting policy for each category of
intangible asset.
Key observations
Based on our procedures, we concluded that the carrying value and
disclosures in the financial statements were appropriate.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature,
timing and extent of our audit procedures. When evaluating whether the effects of misstatements, both
individually and on the financial statements as a whole, could reasonably influence the economic decisions of the
users we take into account the qualitative nature and the size of the misstatements. Based on our professional
judgement, we determined materiality as follows:
Group
Parent Company
Overall materiality
£778,000 (2022: £715,000)
£430,000 (2022: £425,000)
Basis for determining overall
4.5% of two year average adjusted
0.3% of Total Assets
materiality
profit before tax.
Profit before tax has been adjusted
for material non-recurring items.
42
Rationale for benchmark applied
Performance materiality
Basis for determining
performance materiality
Profit before tax is considered the
key benchmark of the Group. We
have normalised this over a two
year period to reflect the fact that
some revenue contracts span
multiple periods.
£583,000 (2022: £536,000)
75% of overall materiality
Total assets is considered the key
benchmark of the parent Company
as the entity relies on its
investments as a non-revenue
generating entity.
£322,500 (2022: £318,000)
75% of overall materiality
Reporting of misstatements to
Misstatements in excess of
Misstatements in excess of
the Audit Committee
£38,900 and misstatements below
£21,500 and misstatements below
that threshold that, in our view,
that threshold that, in our view,
warranted reporting on qualitative
warranted reporting on qualitative
grounds.
grounds.
An overview of the scope of our audit
The Group consists of 35 components, located in the following countries:
United Kingdom
China
Germany
South Korea
India
Brazil
South Africa
Australia
Thailand
Finland
The coverage achieved by our audit procedures was:
Number of
Revenue
Total assets
Absolute Profit
components
before tax
Full scope audit
10
78%
92%
74%
Specific
audit
1
2%
-
-
procedures *
Total
11
80%
92%
74%
*While the specific scope % represents the component's total portion; our procedures consisted of specific audit
procedures over the cut-off of revenue of the component only.
Procedures were performed at Group level and testing of intercompany eliminations were performed for the
remaining 24 components.
Of the above, full scope audits for three components and specific audit procedures for one component were
undertaken by component auditors.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’
assessment of the Group’s and parent Company’s ability to continue to adopt the going concern basis of
accounting included:
•
Review of management’s approved Board paper which set out the going concern basis, key forecasting
assumptions, sensitivities and conclusion;
•
Obtaining copies of management's forecasts and sensitivity analysis for the Group and checking the
mathematical accuracy of the forecasts;
•
Understanding and reviewing the results of the annual budget review process, including submissions from
the UK and overseas businesses which are approved by the Board;
•
Comparing the forecasts to historical trading results and the key assumptions for expected growth, margin
improvement and capital expenditure plans;
•
Undertaking our own stress test to consider circumstances under which headroom would be eroded;
43
•
Verifying the committed funding available to the Group and parent Company for the forecast period and
the headroom this provided to the Group and parent Company.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group’s or the parent Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
In relation to the entity reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the financial statements about
whether the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial
statements and our auditor’s report thereon. The Directors are responsible for the other information contained
within the annual report. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
•
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent Company and their environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
•
the parent Company financial statements and the part of the Directors’ remuneration report to be audited
are not in agreement with the accounting records and returns; or
•
certain disclosures of Directors’ remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Corporate governance statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the parent Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements and our knowledge
obtained during the audit:
44
•
Directors’ statement with regards the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on pages 23 to 24;
•
Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment
covers and why the period is appropriate set out on page 24;
•
Director’s statement on whether it has a reasonable expectation that the Group will be able to
continue in operation and meets its liabilities set out on page 24;
•
Directors’ statement on fair, balanced and understandable set out on page 22;
•
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks
set out on page 13;
•
Section of the annual report that describes the review of effectiveness of risk management and
internal control systems set out on page 27; and,
•
Section describing the work of the Audit Committee set out on page 29.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 39, the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent
Company’s ability to continue as a going concern, disclos ing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities, including fraud Irregularities
are instances of non -compliance with laws and regulations. The objectives of our audit are to obtain sufficient
appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the
determination of material amounts and disclosures in the financial statements, to perform audit procedures to
help identify instances of non-compliance with other laws and regulations that may have a material effect on the
financial statements, and to respond appropriately to identified or suspected non-compliance with laws and
regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the
financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of
material misstatement due to fraud through designing and implementing appropriate responses and to respond
appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to
ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and
for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the Group
audit engagement team and component auditors:
•
obtained an understanding of the nature of the industry and sector, including the legal and regulatory
frameworks that the Group and parent Company operates in and how the Group and parent Company are
complying with the legal and regulatory frameworks;
•
inquired of management, and those charged with governance, about their own identification and
assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud;
45
•
discussed matters about non-compliance with laws and regulations and how fraud might occur including
assessment of how and where the financial statements may be susceptible to fraud, as defined in ISA 250B:
having obtained an understanding of the effectiveness of the control environment.
All relevant laws and regulations identified at a Group level and areas susceptible to fraud that could have a
material effect on the financial statements were communicated to component auditors. Any instances of non-
compliance with laws and regulations identified and communicated by a component auditor were considered in
our audit approach.
The most significant laws and regulations were determined as follows:
Legislation / Regulation
Additional audit procedures performed by the Group audit
engagement team and component auditors included:
IFRS/FRS101 and Companies Act
2006 / Listing Rules
Tax compliance regulations
Manufacturing and operational
regulations
Review of the financial statement disclosures and testing to supporting
documentation.
Review of correspondence with regulators and action taken by the Group
as a result of this correspondence.
Completion of disclosure checklists to identify areas of non-compliance.
Input from a tax specialist was obtained regarding the Group’s transfer
pricing arrangement.
Consideration of whether any matter identified during the audit required
reporting to an appropriate authority outside the entity.
ISAs limit the required audit procedures to identify non-compliance with
these laws and regulations to inquiry of management and where
appropriate, those charged with governance (as noted above) and
inspection of legal and regulatory correspondence, if any.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Revenue recognition – over time
Transactions posted to nominal ledger codes outside of the normal
sales
revenue cycle were identified using a data analytic tool and investigated.
See also the key audit matters section of this report for work performed
over this risk.
Revenue recognition – point in
Transactions posted to nominal ledger codes outside of the normal
time sales
revenue cycle were identified using a data analytic tool and investigated.
Revenues at the period end were tested to identify revenue recognised in
the incorrect period.
Management override of
controls
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates
are indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are
unusual or outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the Board of Directors on 19 March 2021
to audit the financial statements for the year ending 30 April 2021 and subsequent financial periods.
The period of total uninterrupted consecutive appointments is three years, covering the years ended 30 April 2021
and 30 April 2023.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent
Company and we remain independent of the Group and the parent Company in conducting our audit.
46
Our audit opinion is consistent with the additional report to the Audit Committee in accordance with ISAs (UK).
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
In due course, as required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule
(DTR) 4.1.14R, these financial statements will form part of the European Single Electronic Format (ESEF) prepared
Annual Financial Report filed on the National Storage Mechanism of the UK FCA in accordance with the ESEF
Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report provides no assurance over whether the annual
financial report has been prepared using the single electronic format specified in the ESEF RTS.
Ian Wall (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
Festival Way
47
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
f or the year ended 30th April, 2023
2023
2022
Notes
£’000
£’000
CONTINUING OPERATIONS
Revenue…
…
…
…
…
…
…
…
…
…
3, 4
185,742
144,108
Cost of sales
…
…
…
…
…
…
…
…
…
(139,521)
(101,404)
GROSS PROFIT…
…
…
…
…
…
…
…
…
…
46,221
42,704
Distribution expenses
…
…
…
…
…
…
…
…
(3,741)
(3,743)
Administrative expenses
…
…
…
…
…
…
…
(22,167)
(20,654)
OPERATING PROFIT …
…
…
…
…
…
…
…
…
20,313
18,307
Finance costs (net)
…
…
…
…
…
…
…
…
7
(1,438)
(1,169)
Share of profit of associate company
…
…
…
…
…
14
65
63
PROFIT BEFORE TAXATION AND MOVEMENT IN FAIR VALUE
OF INTEREST RATE SWAP*
…
…
…
…
…
…
…
18,940
17,201
Additonal year-on-year unrealised gain on
10 year interest rate swap derivative …
…
…
…
…
…
3,189
2,740
PROFIT BEFORE TAXATION
…
…
…
…
…
…
…
5
22,129
19,941
Tax on profit**
…
…
…
…
…
…
…
…
…
8
(5,616)
(6,321)
PROFIT AFTER TAXATION…
…
…
…
…
…
…
…
16,513
13,620
ATTRIBUTABLE TO:
Equity holders of the parent
…
…
…
…
…
…
…
15,904
12,980
Non-controlling interests
…
…
…
…
…
…
…
609
640
PROFIT FOR THE YEAR
…
…
…
…
…
…
…
…
16,513
13,620
BASIC EARNINGS PER ORDINARY SHARE (in pence) …
…
…
9
206.81 p
169.14 p
DILUTED EARNINGS PER ORDINARY SHARE (in pence)
…
…
9
206.81 p
169.14 p
*
The Chairman’s Statement refers to trading profit, which is the profit before taxation less the further positive movement
in fair value of interest rate swap as trading profit.
**
The Group has received significant benefit from the UK superdeduction capital allowances programme, that has
substantially reduced the corporation tax payable in the UK. For further details, see the additonal commentary in note 8.
The notes on pages 54 to 104 form part of these financial statements.
48
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30th April, 2023
2023
2022
£’000
£’000
PROFIT FOR THE YEAR
…
…
…
…
…
…
…
…
…
16,513
13,620
OTHER COMPREHENSIVE INCOME / (EXPENSE)
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT OR LOSS:
Foreign exchange translation differences
…
…
…
…
…
…
(1,412)
1,493
Effective portion of changes in fair value of cash flow hedges
…
…
3,741
(3,834)
Ineffectiveness in cash flow hedges transferred to profit or loss
…
…
518
(339)
Change in fair value of cash flow hedges transferred to profit or loss
…
1,308
(1,432)
Effective portion of changes in fair value of cost of hedging
…
…
…
(1,447)
275
Ineffectiveness in cost of hedging transferred to profit or loss
…
…
(76)
(23)
Change in fair value of cost of hedging transferred to profit or loss …
…
33
(75)
Tax (charge) / credit on items that may be reclassified subsequently
to profit or loss…
…
…
…
…
…
…
…
…
…
(919)
1,114
OTHER COMPREHENSIVE INCOME / (EXPENSE) FOR THE YEAR,
NET OF INCOME TAX…
…
…
…
…
…
…
…
…
…
1,746
(2,821)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
…
…
…
…
18,259
10,799
ATTRIBUTABLE TO:
Equity holders of the parent
…
…
…
…
…
…
…
…
17,726
10,089
Non-controlling interests
…
…
…
…
…
…
…
…
533
710
18,259
10,799
The notes on pages 54 to 104 form part of these financial statements.
49
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2023
Total
Share-
Cash
attributable
Trans-
based
flow
Cost of
to equity
Non-
Share
lation
payment
hedge
hedging
Retained
holders of
controlling
Total
capital
reserve
reserve
reserve
reserve
earnings
the parent
interests
equity
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
YEAR ENDED
30TH APRIL, 2023
Balance at 1st May, 2022
…
769
463
5,244
(2,746)
140
111,440
115,310
4,433
119,743
Total comprehensive income:
Profit for the year
…
…
‒
‒
‒
‒
‒
15,904
15,904
609
16,513
Other comprehensive income:
Foreign exchange translation
differences
…
…
…
‒
(1,312)
‒
‒
‒
‒
(1,312)
(100)
(1,412)
Effective portion of changes
in fair value
‒
‒
‒
3,741
(1,447)
‒
2,294
‒
2,294
Ineffectiveness transferred
to profit or loss …
…
…
‒
‒
‒
518
(76)
‒
442
‒
442
Change in fair value
transferred to profit
or loss
…
…
…
…
‒
‒
‒
1,274
40
‒
1,314
27
1,341
Tax
…
…
…
…
‒
‒
‒
(1,283)
367
‒
(916)
(3)
(919)
TOTAL COMPREHENSIVE
INCOME / (EXPENSE)
FOR THE YEAR
‒
(1,312)
‒
4,250
(1,116)
15,904
17,726
533
18,259
Transactions with owners:
Dividends paid …
…
…
‒
‒
‒
‒
‒
(8,289)
(8,289)
(556)
(8,845)
BALANCE AT
30TH APRIL, 2023
769
(849)
5,244
1,504
(976) 119,055
124,747
4,410
129,157
The notes on pages 54 to 104 form part of these financial statements.
50
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
for the year ended 30th April, 2022
Total
Share-
Cash
attributable
Trans-
based
flow
Cost of
to equity
Non-
Share
lation
payment
hedge
hedging
Retained
holders of
controlling
Total
capital
reserve
reserve
reserve
reserve
earnings
the parent
interests
equity
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
YEAR ENDED
30TH APRIL, 2022
Balance at 1st May, 2021
…
753
(852)
5,244
1,601
(1)
106,396
113,141
4,887
118,028
Total comprehensive income:
Profit for the year
…
…
‒
‒
‒
‒
‒
12,980
12,980
640
13,620
Other comprehensive income:
Foreign exchange translation
differences
…
…
…
‒
1,315
‒
‒
‒
‒
1,315
178
1,493
Effective portion of changes
in fair value
…
…
…
‒
‒
‒
(3,790)
275
‒
(3,515)
(44)
(3,559)
Ineffectiveness transferred
to profit or loss
…
…
‒
‒
‒
(333)
(23)
‒
(356)
(6)
(362)
Change in fair value
transferred to profit
or loss
…
…
…
…
‒
‒
‒
(1,359)
(64)
(1,423)
(84)
(1,507)
Tax
…
…
…
…
‒
‒
‒
1,135
(47)
‒
1,088
26
1,114
TOTAL COMPREHENSIVE
INCOME / (EXPENSE)
‒
FOR THE YEAR
‒
1,315
(4,347)
141
12,980
10,089
710
10,799
Transactions with owners:
Issue of shares …
…
…
16
‒
‒
‒
‒
‒
16
‒
16
Acquisition of NCI without a
change in control
…
…
‒
‒
‒
‒
‒
(74)
(74)
(356)
(430)
Dividends paid …
…
…
‒
‒
‒
‒
‒
(7,862)
(7,862)
(808)
(8,670)
BALANCE AT
30TH APRIL, 2022
769
463
5,244
(2,746)
140
111,440
115,310
4,433
119,743
The notes on pages 54 to 104 form part of these financial statements.
51
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED BALANCE SHEET
at 30th April, 2023
2023
2022
Notes
£’000
£’000
NON-CURRENT ASSETS
11
101,243
87,594
Property, plant and equipment
…
…
…
…
…
…
…
Right-of-use assets
…
…
…
…
…
…
…
…
12
6,763
6,191
Investment in associate
…
…
…
…
…
…
…
…
14
964
896
Intangible assets …
…
…
…
…
…
…
…
…
…
15
25,448
24,817
Long-term trade receivables …
…
…
…
…
…
…
…
18
‒
1,191
Derivative financial assets
…
…
…
…
…
…
…
…
16, 28
5,932
2,741
CURRENT ASSETS
140,350
123,430
Inventories…
…
…
…
…
…
…
…
…
…
…
17
47,955
40,364
Contract assets
…
…
…
…
…
…
…
…
…
…
4
16,257
12,331
Trade and other receivables …
…
…
…
…
…
…
…
18
34,589
28,647
Corporation tax receivable
…
…
…
…
…
…
…
…
1,337
1,347
Derivative financial assets
…
…
…
…
…
…
…
…
19, 28
2,684
1,211
Cash and cash equivalents
…
…
…
…
…
…
…
…
20
19,661
11,651
122,483
95,551
TOTAL ASSETS
…
…
…
…
…
…
…
…
…
…
262,833
218,981
CURRENT LIABILITIES
Borrowings
…
…
…
…
…
…
…
…
…
…
21
6,729
2,764
Contract liabilities
…
…
…
…
…
…
…
…
…
4
32,747
14,749
Trade and other payables
…
…
…
…
…
…
…
…
22
31,765
27,260
Derivative financial liabilities …
…
…
…
…
…
…
…
23, 28
2,383
2,393
Liabilities for current tax
…
…
…
…
…
…
…
…
921
1,886
Provisions for liabilities and charges
…
…
…
…
…
…
24
266
205
NON-CURRENT LIABILITIES
74,811
49,257
Borrowings
…
…
…
…
…
…
…
…
…
…
21
47,256
40,376
Derivative financial liabilities …
…
…
…
…
…
…
…
25,28
‒
1,643
Provisions for liabilities and charges
…
…
…
…
…
…
24
246
251
Deferred tax liabilities …
…
…
…
…
…
…
…
…
26
11,363
7,711
58,865
49,981
TOTAL LIABILITIES …
…
…
…
…
…
…
…
…
…
133,676
99,238
NET ASSETS …
…
…
…
…
……………
…
129,157
119,743
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
27
769
769
Share capital
…
…
…
…
…
…
…
…
…
…
Translation reserve
…
…
…
…
…
…
…
…
…
27
(849)
463
Share-based payments reserve
…
…
…
…
…
…
…
27
5,244
5,244
Cash flow hedge reserve
…
…
…
…
…
…
…
…
28
1,504
(2,746)
Cost of hedging reserve
…
…
…
…
…
…
…
…
28
(976)
140
Retained earnings
…
…
…
……………
…
119,055
111,440
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
124,747
115,310
NON-CONTROLLING INTERESTS
…
…
…
…
…
…
…
13
4,410
4,433
TOTAL EQUITY
…
…
…
…
…
…
…
…
…
…
129,157
119,743
These financial statements were approved by the Board of Directors on 7th August, 2023, and signed on its behalf by:
T. J. W. Goodwin
M. S. Goodwin
S. R. Goodwin
Director
Director
Director
Company Registration Number: 305907
The notes on pages 54 to 104 form part of these financial statements.
52
FINANCIAL STATEMENTS
GOODWIN PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30th April, 2023
2023
2022
Notes
£’000
£’000
CASH FLOW FROM OPERATING ACTIVITIES
13,620
Profit from continuing operations after tax
…
…
…
…
…
…
16,513
Adjustments for:
Depreciation of property, plant and equipment …
…
…
…
…
6,272
6,202
Depreciation of right-of-use assets …
…
…
…
…
…
…
1,198
1,192
Amortisation and impairment of intangible assets
…
…
…
…
1,257
1,572
Finance costs (net)
…
…
…
…
…
…
…
…
…
1,438
1,169
Currency (gains) / losses net of unhedged derivative movements …
…
1,213
(1,535)
Loss / (profit) on sale of property, plant and equipment
…
…
…
134
(18)
Unrealised gain on 10 year interest rate swap derivative
…
…
…
(3,189)
(2,740)
Share of profit of associate company
…
…
…
…
…
…
(65)
(63)
UK tax incentive credit on research and development…
…
…
…
(610)
(675)
Tax expense
…
…
…
…
…
…
…
…
…
…
5,616
6,321
OPERATING CASH FLOW BEFORE CHANGES IN WORKING
CAPITAL AND PROVISIONS
29,777
25,045
(Increase) in inventories…
…
…
…
…
…
…
…
…
(8,377)
(5,175)
(Increase) / decrease in contract assets
…
…
…
…
…
…
(3,804)
3,498
(Increase) in trade and other receivables …
…
…
…
…
…
(5,304)
(3,341)
Increase in contract liabilities…
…
…
…
…
…
…
…
*
17,954
472
Increase in trade and other payables
…
…
…
…
…
…
4,072
804
CASH GENERATED FROM OPERATIONS
34,318
21,303
Interest received
…
…
…
…
…
…
…
…
…
75
157
Interest paid
…
…
…
…
…
…
…
…
…
…
(2,015)
(1,415)
Corporation tax paid
…
…
…
…
…
…
…
…
…
(3,251)
(2,051)
NET CASH INFLOW FROM OPERATING ACTIVITIES …
…
…
…
29,127
17,994
CASH FLOW FROM INVESTING ACTIVITIES
341
Proceeds from sale of property, plant and equipment …
…
…
…
218
Acquisition of property, plant and equipment
…
…
…
…
…
(18,871)
(16,215)
Additional investment in existing subsidiaries
…
…
…
…
…
**
‒
(430)
Acquisition of intangible assets
…
…
…
…
…
…
…
(675)
(282)
Development expenditure capitalised
…
…
…
…
…
…
(1,196)
(1,505)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
…
…
…
(20,524)
(18,091)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of shares
…
…
…
…
…
…
…
…
…
…
‒
16
Payment of capital element of lease liabilities
…
…
…
…
…
(1,874)
(1,153)
Dividends paid
…
…
…
…
…
…
…
…
…
…
(8,289)
(7,862)
Dividends paid to non-controlling interests
…
…
…
…
…
(556)
(808)
Proceeds from new loans
…
…
…
…
…
…
…
…
11,500
6,702
Repayment of loans and committed facilities
…
…
…
…
…
(1,181)
(683)
Change in bank overdrafts
…
…
…
…
…
…
…
…
119
‒
NET CASH OUTFLOW FROM FINANCING ACTIVITIES
(281)
(3,788)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
…
8,322
(3,885)
Cash and cash equivalents at beginning of year…
…
…
…
…
11,651
15,160
Effect of exchange rate fluctuations on cash held
…
…
…
…
(312)
376
CASH AND CASH EQUIVALENTS AT END OF YEAR …
…
…
…
20
19,661
11,651
*
The majority of contract liabilities are advance payments from customers.
**
The cash flow impact of the additional investment in existing subsidiaries should have been reported within cash flows from
financing activities. This has not been amended in the prior year comparative, as the value is not material to the Group.
The notes on pages 54 to 104 form part of these financial statements.
53
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies
Goodwin PLC (the “Company”) is incorporated in England and Wales.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the
“Group”) and equity account the Group’s interest in associates. The parent Company financial statements present
information about the Company as a separate entity and not about its Group.
The Group’s financial statements have been prepared in accordance with UK adopted International Accounting
Standards (IAS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies
reporting under UK adopted IFRS.
The Company has elected to prepare its financial statements in accordance with Financial Reporting Standard (FRS)
101 issued in the UK. These are presented on pages 92 to 103.
The accounting policies set out below have been applied consistently to all periods presented in these Group financial
statements.
Judgements made by the Directors, in the application of these accounting policies that have significant effect on the
financial statements and estimates with a possible significant risk of material adjustment in the next year are discussed in
note 2.
Going concern
The Directors, after having reviewed the projections and possible challenges that may lie ahead, believe that there is a
reasonable expectation that the Group has adequate resources to continue in operational existence for at least twelve
months from the date of approval of these financial statements, and have continued to adopt the going concern basis in
preparing the financial statements.
As at 30th April 2023, the Group’s gearing ratio stood at 26.3% (2022: 25.8%) against a substantial shareholders
net worth of £125 million (2022: £115 million). The retained reserves of the Group put it in a strong position to deal with
unforeseen material adverse issues.
The Group has continued to incur high energy costs throughout the financial year, but it has been able to manage the
increases in costs. With the measures already put in place by the Group and the continued monitoring of the energy costs
incurred, we do not see the impact of energy costs giving rise to a going concern issue. Furthermore, the fact that it is
Group policy to manufacture and sell products with high technology and high gross margins assists in insulating the
Group from high energy costs.
Within our severe but plausible stress test model, it is demonstrable that the Group has sufficient funds, after the share
buy-back transaction, to cover the Group’s and the Company’s financial commitments during the forecast period whilst
remaining compliant with its financial covenants. The stress test model starts with the forecasts generated by the
subsidiary directors and reflects their specific knowledge of the market conditions, strategy and outlook. Each of these
subsidiary level forecasts is then reviewed, challenged and approved by the relevant Group Managing Director who
themselves are immersed in each of the businesses. The stress test model then predicts the impact of a severe but
plausible reduction in the pre-tax profit forecast by reducing revenues by 18% without adjusting downwards the capital
expenditure programme, maintaining the overheads at their current expected levels and keeping the financing facilities at
the same amounts that were in place at year end. The results of the stress test modelling did not highlight any going
concern issues, breaches of covenants or requirements for any further financing facilities.
Whilst our carrying values of trade debtors and contract assets are significant, we see little risk here in terms of recovery.
We credit insure our debtors and our pre credit risk (work in progress), and for significant contracts, where credit
insurance is not available, we ensure, where possible, that these contracts are backed by letters of credit or cash positive
milestone payments.
As discussed elsewhere within these accounts, the Mechanical Engineering order book remains high and the
Refractory Engineering segment is buoyant.
The Directors are confident that the Group and Company will have sufficient funds to continue to meet their liabilities as
they fall due for at least twelve months from the date of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
Measurement convention
The financial statements are rounded to the nearest thousand pounds. The financial statements are based on the
historical cost basis except where the measurement of balances at fair value is required as below.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to
govern the financial and operating policies of an entity so as to obtain benefits from its activities. The Group controls an
entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases.
Associates are those entities in which the Group has significant influence, but not control, over the financial and operating
policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power
of another entity. Associates are accounted for using the equity method and are initially
54
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Basis of consolidation (continued)
recognised at cost. The Group's investment includes goodwill identified on acquisition, net of any accumulated
impairment losses. The consolidated financial statements include the Group's share of the total recognised income and
expense and equity movements of equity accounted investees, from the date that significant influence commences until
the date that significant influence ceases. When the Group's share of losses exceeds its interest in an equity accounted
investee, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the
extent that the Group has incurred legal or constructive obligations or made payments on behalf of an investee.
Foreign currency
The functional and presentational currency of the Group is Pound Sterling (£). Where foreign currency transactions are
hedged, the transactions are recorded at their hedged rate. All other transactions in foreign currencies are translated into
the respective functional currencies of the Group entities at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign
exchange rate ruling at that date. Foreign exchange movements associated with hedged transactions are recognised in
the cash flow hedge reserve, whilst non-hedged foreign exchange differences arising on translation are recognised in the
statement of profit or loss within operating profit.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are
translated to Pound Sterling at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of
foreign operations are translated at an average rate for the period where this rate approximates to the foreign exchange
rates ruling at the dates of the transactions.
Exchange differences arising from the translation of foreign operations are taken directly to the translation reserve.
They are released into the statement of profit or loss upon disposal of the foreign operation.
New IFRS standards and interpretations adopted during 2022 / 2023
The IASB and IFRIC issued the following amendments:
•
Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions,
Contingent Liabilities and Contingent Assets; and Annual Improvements 2018-2020 – (effective for periods
commencing on or after 1st January, 2022).
The implementation of these amendments has not had a material impact on the Group’s financial statements.
New IFRS standards and interpretations not adopted
Amendments to existing standards or new standards and interpretations that have been issued but are not yet effective
and have not been adopted by the Group are listed below:
•
•
•
•
•
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors ‘Definition of Accounting
Estimates’ – (effective for periods commencing on or after 1st January, 2023).
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current
and Classification of Liabilities as Current or Non-current - Deferral of Effective Date – (effective for periods
commencing on or after 1st January, 2023, subject to endorsement).
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting Policies – (effective for periods commencing on or after 1st January, 2023).
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction – (effective for periods commencing on or after 1st January, 2023).
Amendments to IAS 1 Non-current liabilities with covenants - (effective for periods on our after 1 January 2024).
The Group does not expect that any standards, amendments or interpretations issued by the IASB, but not yet effective,
will have a material impact on the financial statements once adopted.
Revenue
Revenue is recognised when a customer obtains control of the goods or services i.e. upon the satisfaction of a
performance obligation. Judgement is required to determine the timing of the transfer of control, and whether it is at a
point in time or over time. Where a contract contains several performance obligations then the contract is unbundled and
each performance obligation is dealt with separately.
Standard inventory product lines and consumables
Typically applies to the sale of slurry pumps within the Mechanical Engineering Division and to the whole of the Group’s
Refractory Engineering Division. The revenue here relates to standard products manufactured for sale. The performance
obligation is satisfied and revenue recognised at the point when customers obtain control of the goods in accordance with
the International Commercial (INCO) terms agreed. There are also bill and hold arrangements, where control passes to
the customer once the customer confirms that the job has been completed, but where the goods are yet to be collected
and remain at the Company premises.
55
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Revenue (continued)
Minimum period contracts for the provision of goods and services
Predominantly the supply of broadband and related services under minimum term contracts. Performance obligations
are satisfied over time and revenue is recognised equally over the term of the contract.
Engineered bespoke products – performance obligations satisfied over time
Typically applies to the Group’s Mechanical Engineering Division and covers sales orders which are customer bespoke,
and have a cancel for convenience clause. This clause then permits the Group subsidiary to claim profit as the project
progresses over time to completion and if the customer were to trigger the cancel for convenience clause within the
contract, claim profit from the customer to that point in time. In such cases, the performance obligations are treated as
satisfied over time (i.e. as the contract progresses) and revenue is taken based on the percentage completion of the
contract by the creation of a contract asset. Work in progress is eliminated and replaced by a contract asset. Measuring
progress requires judgement as to the stage of completion of each job, and the production of forecasts of costs to
complete, which contain allowances for technical risks and inherent uncertainties. The input method is considered to be
the most appropriate, because costs are the significant indicator of the job performance and expected contract
profitability. Using the input method, costs to date are factual and based on job cost records. As jobs progress through the
factories, the cost estimate sheets, generated at order placement, are adjusted for known time-based or commodity-
based variances. The cost estimate sheets are the source for the calculation of the total estimated costs on a job. At both
senior and middle management level, there is a high level of continuity and expertise to interrogate the costings and so
arrive at an appropriate assessment of the total costs on a job, and to then determine the percentage of completion for
each contract. The contracts within the Group do not include variable consideration. Contract modifications
Where the Group has modifications or variations to a contract, then these are included in the contract calculations only
when there is a high probability that they are certain to occur, which the Group considers to be when there is a signed
agreement in place.
Engineered bespoke products – performance obligations satisfied at a point in time
Typically applies to the Group’s Mechanical Engineering segment and covers sales orders which are customer bespoke,
but permit the Group subsidiary to claim profit only on completion of the project or only the costs incurred to date in the
event the customer triggers the cancel for convenience clause within the contract. In such cases, the performance
obligation is deemed to be met and revenue taken as order lines are shipped in accordance with the relevant shipping
terms or via a bill and hold arrangement, whereby control passes to the customer, once the customer confirms that the job
has been completed, but where the goods are yet to be collected, and remain at the Company premises.
Where the contract period is less that one year, the incremental costs of winning a contract are recognised as an
expense as they are incurred.
Contract assets / contract liabilities
Contract assets represent the Group’s rights to consideration for work completed but not invoiced at the reporting date for
bespoke product contracts where, as part of the contract terms, there is a termination for convenience clause which, if
invoked, allows the Group company to charge for profit earned to date. Contract assets are transferred to receivables
when the rights to consideration become unconditional, which is generally when the Group invoices the customer. Where
payments are received in advance and exceed the costs incurred in constructing the asset together with forecast margin
earned, the balances are disclosed as contract liabilities.
Employment costs
Pension costs
The Group contributes to a defined contribution pension scheme for UK employees under an Auto Enrolment Pension
arrangement as required by Government legislation. The assets of the scheme are held in independently administered
funds. Group pension costs are charged to the statement of profit or loss in the year for which contributions are payable.
Contributions to the schemes are made on a monthly basis and at the end of the financial year there were one month’s
contributions outstanding, which were paid in the following month.
Termination costs
Employee termination costs are expended in the profit and loss figures in a year as soon as the expense is known and
is certain.
Share-based payment transactions
Share-based payments arrangements, in which the Group receives goods or services as consideration for its own equity
instruments, are accounted for as equity-settled share-based payment transactions, regardless of how the equity
instruments are obtained by the Group.
The grant date fair value of share-based payment awards granted to employees is recognised as an expense, with a
corresponding increase in equity, over the period in which the employees become unconditionally entitled to the awards.
The fair value of the awards is measured using an option valuation model, taking into
account the terms and conditions upon which the awards were granted.
56
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Financial income and costs
Financial expenses comprise interest payable (together with the amortisation of any facility arrangement fees) and
interest on lease liabilities using the effective interest method. Borrowing costs that are directly attributable to the
acquisition, construction or production of an asset that takes a substantial time to be
prepared for use are capitalised as part of the cost of that asset. Interest income and interest payable is recognised in
the statement of profit or loss as it accrues.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the statement of profit or loss
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for:
the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable
profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they
will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner
of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively
enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
Financial instruments
Measurement
Trade and other receivables, which do not contain a significant financing component, are measured, initially, at the
transaction price. All other financial assets and liabilities are measured at fair value, on initial recognition.
Non-derivative financial assets are measured subsequently at amortised cost if the objective is to hold them to collect
contractual cash flows and their contractual terms include cash flows on specified dates, which are payments of
principal and interest.
Impairment
The Group has elected to measure loss allowances for trade receivables and contract assets at an amount equal to
lifetime expected credit losses (ECLs). Specific impairments are made when there is a known impairment need
against trade receivables and contract assets. When estimating ECLs, the Group assesses reasonable, relevant and
supportable information, which does not require undue cost or effort to produce. This includes quantitative and
qualitative information and analysis, incorporating historical experience, informed credit assessments and forward -
looking information. Loss allowances are deducted from the gross carrying amount of the assets. Where material,
impairment losses related to trade and other receivables, including contract assets, are disclosed separately in the
statement of profit or loss.
Principal non-derivative financial assets
Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. They are recognised initially at the amount of consideration that is unconditional. Trade receivables are held
with the intention of collecting the contractual cash flows and are measured subsequently, therefore, at amortised cost.
Other financial assets
Other financial assets principally comprise short -term balances, which include sales taxes repayable to the Group.
After being recognised initially at fair value, other receivables are measured, subsequently, at amortised cost. The
carrying amount of other receivables is considered to be a reasonable approximation of their fair value.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, together with cash deposits with an original maturity of
three months or less.
Principal non-derivative financial liabilities
Bank borrowings
Interest-bearing bank loans and overdrafts are measured initially at their fair value less attributable transaction costs.
They are carried, subsequently, at amortised cost and finance charges are recognised in the statement of profit or loss
over the contract term, using an effective rate of interest.
57
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Financial instruments (continued)
Principal non-derivative financial liabilities (continued) Trade
and other payables
Trade and other payables are recognised initially at fair value, and are subsequently reported at amortised cost.
Derivative financial assets and liabilities
Derivative financial assets and liabilities are recognised at fair value. The fair value of forward exchange contracts is
equal to the present value of the difference between the contractual forward price and the current forward price for the
residual maturity of the contract adjusted for counterparty credit risk. The recognition of the gain or loss on re -
measuring to fair value those forward exchange contracts, which are used for hedging, is outlined below; for other
forward exchange contracts and the interest rate swap derivative, the gain or loss is recognised in the profit or loss.
Fair value derivation
IFRS 7 requires that the classification of financial instruments at fair value be determined by reference to the source of
inputs used to derive the fair value. This classification uses the following three-level hierarchy:
Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 — inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3 — inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair value of derivative financial assets and liabilities is derived using level 2 inputs. As at the year-end, the Group
held currency derivatives and an interest rate swap derivative. For the currency derivatives, the valuations are based
on the period end currency rates, as adjusted for the forward points to maturity, the time value of money and the banks’
assessed credit risk and margin. For the interest rate swap derivative, the valuation is arrived at by comparing the
forward interest curve as at 30th April, 2023 out to maturity against our fixed swap rate. The result is then discounted
for the time value of money and adjusted for credit risk and margin.
Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or
liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial
instrument is recognised directly in the hedging reserve. Our hedge relationships are aligned with our risk management
objectives and strategy, resulting in a more qualitative and forward-looking approach in ensuring hedge effectiveness.
For cash flow hedges, the associated cumulative gain or loss on the relevant derivative financial instrument is removed
from equity and recognised in the statement of profit or loss in the same period or periods
during which the hedged forecast transaction affects the statement of profit or loss. Any identified ineffective portion of the
hedge is recognised immediately in the statement of profit or loss. Only the change in spot rate is designated as the
hedging instrument, with the change in fair value relating to forward points being reported separately as deferred costs of
hedging within other comprehensive income as permitted by IFRS 9. Where a derivative financial instrument is not hedge
accounted, all changes in fair value are recognised in profit or loss.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge
relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains
in equity and is recognised in accordance with the above policy when the transaction occurs. If the cash flow hedge
transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised
in the statement of profit or loss immediately, within cost of sales.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items of property, plant and equipment.
Depreciation is charged to the statement of profit or loss over the estimated useful lives of each part of an item of property,
plant and equipment on the following bases:
•
Freehold land
…
…
…
…
Nil
•
Freehold buildings …
…
…
…
2% to 4% on reducing balance or cost
•
Leasehold property
…
…
…
over period of lease
•
Plant and machinery
…
…
…
5% to 25% on reducing balance or cost
•
Motor vehicles
…
…
…
…
15% or 25% on reducing balance
•
Tooling
…
…
…
…
…
over estimated production life
•
Other equipment
…
…
…
…
15% to 25% on reducing balance or cost
•
Assets in the course of construction
…
Nil
58
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Leases
Definition of a lease
A contract is a lease or contains a lease if it transfers the right to use an identified asset over the contract term, in
exchange for payment. In determining whether a contract gives the Group the right to use an asset, the Group assesses
whether:
•
•
•
the contract involves the use of an identified asset;
the Group has the right to obtain substantially all of the economic benefit of using the asset; and the
Group has the right to direct the use of the asset by deciding how the asset is employed.
Lease term
The lease term is the non-cancellable period of a lease, and options to extend the lease or terminate it, where it is
probable that the Group will exercise the available options. At the start of a lease, the Group makes a judgement about
whether it is reasonably certain to exercise the options, and reassesses this judgement at every reporting period.
Contracts, where the original lease term has expired, with assets continuing to be leased on a short-term rolling basis of a
few months, are treated as short-term leases.
Lease balances
A
right-of-use asset and a lease liability are calculated at the beginning of a lease. The right-of-use asset is measured
initially at cost, being the opening lease liability, adjusted for any lease payments made by the start of the lease, adjusted
for any initial direct costs, which have been incurred.
The lease liability is measured initially at the present value of the lease payments, which are outstanding at the start date,
discounted at either the rate implicit in the lease or the Group’s incremental borrowing rate. With the exception of leases
containing an option to purchase, the Group uses its incremental borrowing rate as the discount rate. Lease liabilities are
measured at amortised cost, using the effective rate, and adjusted as required for any subsequent change to the lease
terms.
The right -of -use asset is depreciated on a straight-line basis over the lease term, or from the start date of the lease to the
end of the useful life of the right-of- use asset as appropriate. The method of calculating the estimated useful lives of the
right-of-use assets and testing for impairment is the same as that for property, plant and equipment.
Recognition exemptions
Payments for short-term leases, lasting twelve months or less, without a purchase option are reported as an operating
expense on a straight-line basis over the term of the lease.
The cost of leasing low-value items is reported as an operating expense over the life of the lease.
Lease portfolios
The Group has leases for the following types of assets:
Land and buildings – the Group leases a number of factory buildings, warehouses and office buildings.
Plant and equipment – a number of significant items of plant, such as CNC machines and furnaces, have been leased
under contracts with an option to buy the asset at the end of the lease term. The Group also leases motor vehicles. For
motor vehicles the Group has applied the practical expedient in paragraph 15 of IFRS 16, whereby non-lease
components have not been separated from lease components, such that lease costs and service costs are treated as a
single lease component.
Printers and photocopiers – the Group has applied the recognition exemption for low-value assets to these leases.
Government grants
Government grants relating to income are recognised in the statement of profit or loss.
Government grants relating to assets are recognised in the balance sheet as a deduction in the carrying amount of the
asset. Depreciation is charged on the value of the asset less the associated grant.
Intangible assets and goodwill
All business combinations are accounted for by applying the purchase method. Goodwill is recognised as the difference
between the consideration transferred and the fair value of identifiable assets, liabilities and contingent liabilities assumed
in a business combination. Identifiable intangibles are those which can be sold separately or which arise from legal rights
regardless of whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is
not amortised but is tested annually for impairment.
Negative goodwill arising on an acquisition is recognised immediately in the statement of profit or loss.
Goodwill or negative goodwill resulting from increasing the percentage ownership of an existing subsidiary is reported as
an equity transaction with owners.
Expenditure on research activities is recognised in the statement of profit or loss as an expense as incurred.
59
NOTES TO THE FINANCIAL STATEMENTS
1.
Accounting policies (continued)
Intangible assets and goodwill (continued)
Expenditure on development activities is capitalised if the product or process is technically and commercially
feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost
of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in
the statement of profit or loss as an expense as incurred. Capitalised development expenditure is stated at cost less
accumulated amortisation and impairment losses.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and
impairment losses.
Amortisation is charged to the statement of profit or loss on a straight-line basis over the estimated useful lives of
intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are
systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they
are available for use. The estimated useful lives are as follows:
•
Capitalised development costs
Minimum expected order unit intake or minimum product life
•
Manufacturing rights
6
- 15 years
•
Brand names and intellectual property
3
- 20 years
•
Customer lists
2
- 10 years
•
Order book
1 year
•
Distribution rights
25 years
•
Software and licences
3
- 5 years
•
Non-compete agreements
15 years
Impairment of intangibles
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether
there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.
Recoverable amount is the greater of an asset’s or cash-generating unit’s CGU fair value less costs to sell or value in use.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the
recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in the statement of profit or loss.
Reversals of impairment
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no
longer exist and there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset of CGU’s carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is based on the first-in, first-out principle and
includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the
case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on
normal operating capacity.
Provisions
General provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of
a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Warranty provisions
The Group carries a warranty provision where applicable. The warranties are committed at contract placement stage and
typically, where given to a customer, the warranty has a duration of between 1 and 3 years. At the expiry of the warranty
period, to the extent not utilised, the warranty provision is then released back into the statement of profit or loss. The
warranties are generally passive in nature confirming that the goods comply with contractual specifications and given the
incidence of product failure is low, the warranties have no tangible customer value.
60
NOTES TO THE FINANCIAL STATEMENTS
2.
Accounting estimates and judgements
The Group makes judgements and estimates in applying the Group’s accounting policies, to prepare the financial
statements. The Directors do not believe there have been any key judgements exercised during the period, but see the
following as the key estimates considered.
Key estimates and judgements
IFRS 15 Revenue Recognition
The Directors consider that a key estimate, which may have a material impact on the financial statements, is in relation to
IFRS 15 and, in particular, where we are mandated to account on a revenue over time basis on some of our mechanical
engineering work in progress contracts. When reviewing the terms of contracts with customers, judgement is required to
assess the number of performance obligations within the contracts and when to recognise contract provisions.
For contracts where revenue is recognised over time, there is a need to estimate the costs to complete on these contracts.
The costs to complete estimates can be complex, as they need to consider several variable factors such as the impact of
delays, cost overruns and also any variations to contract. Once complete, these
estimates then drive the amount of revenue recognised. The estimates are prepared and reviewed by management with
suitable experience and qualifications, and who endeavour to ensure the revenue mandated to be recognised prior to the
completion of the contract is not under or overstated, based on possible technical risks and inherent uncertainties.
Whilst cost to complete estimates are based on management’s best knowledge at the time, it is clear, due to the very
nature of an estimate that the eventual outcomes may differ due to unforeseen events. However, the advanced stage of
completion of a number of contracts reduces the risk of unforeseen events arising, and given that the initial position taken
on material contracts at the balance sheet date is revisited as part of the post balance sheet review process prior to the
financial statements being signed off, we would conclude that the risk of a material impact on the financial statements
arising from changes in estimates here is low. If the costs to complete contracts, that had not been completed as at the
year end, were 1% higher than estimated at the year-end, for which this increase in costs could not be passed on to the
customer, then the impact to the current year’s revenue would be £328,000.
Where there are claims which are subject to commercial negotiation, these are recognised only when there is a high level
of certainty, which the Group considers this to be when there is a signed agreement in place. Consideration is given to the
requirements of IFRS15 in determining the appropriate accounting for the claim settlements which takes into account the
nature of the settlement and whether it relates to a point in time or over time revenue contract.
Determination of the basis for the amortisation / impairment of intangible assets
The Group carries different classes of intangible assets on its balance sheet, which include goodwill, manufacturing
rights, brand names and development costs. Capitalised intangible costs are amortised on a straight-line basis, which
commences when the Group is expected to benefit from cash inflows. A key estimate is required in determining the useful
economic life over which each asset is to be amortised, with current timeframes ranging from fifteen to twenty-five years.
In arriving at the appropriate timeframe for amortisation, there are essentially two key estimates, namely the product life
cycle and the amount of profit generated from the expected income streams. In terms of sensitivity, then, in regard to the
intangible assets other than goodwill, if we were to assume assets with estimated useful lives of fifteen years or more
were reduced by one third, then the pre tax profit and loss impact on the current year reported figures would be to reduce
profits by £488,000 (2022: £471,000). In accordance with IAS 38, the basis on which goodwill / intangible assets are
impaired / amortised is assessed annually. Sensitivity as regards goodwill is considered within note 15 to these financial
statements.
Apart from above, the Group does not have any key assumptions concerning the future, or other key sources of
estimation uncertainty in the reporting period that may have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year.
Duvelco viability
The Company has invested circa £14 million in the area of high performance polymer resins. The Company will
commence a period of testing and commissioning of the plant in Q2 and Q3 of financial year 2024 before any commercial
activity takes place. The judgement of the Board is that the market potential here is significant and that future profitability
is expected to be strong. Accordingly, the Directors do not see a need to impair our investment in this area.
Other estimates and judgements
Other than as reported above, the Directors do not consider there to be any key estimates or judgements in preparing the
financial statements. The estimates and judgements outlined below formed the main areas of focus for the Directors
throughout the year.
Inventory provisions
The Group's Directors in conjunction with senior management in the subsidiaries regularly review the recoverability of
their stated raw material and work in progress balances, paying particular attention to net realisable value and stock
obsolescence issues. The estimates are in relation to costs to complete and the expected level of future sales orders for
slow moving stocks. Where it is judged that a provision is deemed necessary, the appropriate adjustments are made in
the relevant subsidiary's books at the time a shortfall is identified.
61
NOTES TO THE FINANCIAL STATEMENTS
2.
Accounting estimates and judgements (continued)
Other estimates and judgements (continued)
Trade receivable provisions
Whilst trade debtors are insured wherever possible, the Directors are able to exercise judgement in relation to non-credit
insured contracts as set out in note 28 (a). The Group Directors, in conjunction with the subsidiary credit controllers,
closely monitor the adherence to payment terms across all accounts (whether insured or not) and make provision for any
losses that are likely to materialise. There is a requirement under IFRS 9 to consider the statistical likelihood of a bad debt
based off previous experience. Historically, the Group’s bad debt write offs have been negligible and the Group results are
not impacted by this requirement for a statistically based provision.
62
NOTES TO THE FINANCIAL STATEMENTS
3.
Segmental information
Products and services from which reportable segments derive their revenues
For reporting to the chief operating decision maker, the Board of Directors, and as outlined in the Business Model section
of the Strategic Report on page 8, the Group is organised into two reportable operating segments according to the
different products and services provided by the Mechanical Engineering and Refractory Engineering Divisions. Segment
assets and liabilities include items directly attributable to segments as well as group centre balances which can be
allocated on a reasonable basis. Associates are included in Refractory Engineering. In accordance with the requirements
of IFRS 8, information regarding the Group’s operating segments is reported below.
In previous years the segmental analysis of net assets, capital expenditure and depreciation was based on the legal
structure of the Group. This year, the analysis represents the operational structure of the Group and the prior year
comparatives have been updated accordingly. There are no other reportable segments apart from those identified.
Year ended 30th April, 2023
Year ended 30th April, 2022
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
Revenue
£’000
£’000
£’000
£’000
£’000
£’000
External sales
…
…
123,767
61,975
185,742
87,605
56,503
144,108
Inter-segment sales
…
23,771
18,365
42,136
17,784
15,523
33,307
Total revenue
…
…
147,538
80,340
227,878
105,389
72,026
177,415
Reconciliation to consolidated revenue:
Inter-segment sales
…
(42,136)
(33,307)
Consolidated revenue for the year
185,742
144,108
Year ended 30th April, 2023
Year ended 30th April, 2022
Profits
£’000
£’000
£’000
£’000
Mechanical Engineering
…
…
49
12,171
42
9,139
Refractory Engineering
…
…
51
12,772
58
12,657
Segment operating profit
100
24,943
100
21,796
Group centre
…
…
…
…
(4,630)
(3,489)
Group operating profit
20,313
18,307
Finance costs (net)
…
…
…
(1,438)
(1,169)
Share of profit of Refractory
associate company
…
…
…
65
63
Profit before taxation and
movement in fair value of
interest rate swap
18,940
17,201
Unrealised gain on 10 year
interest rate swap derivative
…
3,189
2,740
Profit before tax
22,129
19,941
Tax on profit
…
…
…
…
(5,616)
(6,321)
Profit after tax
16,513
13,620
63
NOTES TO THE FINANCIAL STATEMENTS
3.
Segmental information (continued)
Products and services from which reportable segments derive their revenues (continued)
Year ended 30th April, 2023
Year ended 30th April, 2022
Group
Mechanical
Refractory
Group
Mechanical
Refractory
centre Engineering Engineering
Total
centre Engineering Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Net assets
Total assets
18,644
175,023
69,166
262,833
18,493
141,995
58,493
218,981
Total liabilities
(2,821)
(103,234)
(27,621)
(133,676)
(2,595)
(77,211)
(19,432)
(99,238)
Total
15,823
71,789
41,545
129,157
15,898
64,784
39,061
119,743
For the purposes of monitoring segment performance and allocating resources between segments, the Group's Board of
Directors monitors the tangible and financial assets attributable to each segment. All assets and liabilities are allocated to
reportable segments with the exception of some of those held by the parent Company, Goodwin PLC.
Year ended 30th April, 2023
Year ended 30th April, 2022
Group
Mechanical
Refractory
Group
Mechanical
Refractory
centre
Engineering Engineering
Total
centre Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Segmental capital expenditure
Property,
plant and
equipment
630
15,623
4,928
21,181
1,868
9,596
4,889
16,353
Right-of-use
assets
220
1,233
66
1,519
419
2,423
881
3,723
Intangible
assets
11
508
1,305
1,824
64
1,121
602
1,787
Total
861
17,364
6,299
24,524
2,351
13,140
6,372
21,863
Segmental depreciation, amortisation and impairment
Depreciation
1,070
4,872
1,528
7,470
1,046
4,643
1,705
7,394
Amortisation
and impairment
64
446
747
1,257
123
668
781
1,572
Total
1,134
5,318
2,275
8,727
1,169
5,311
2,486
8,966
Geographical segments
The Group operates in the following principal locations. In presenting the information on geographical segments,
revenue is based on the location of its customers and assets on the location of the assets.
Year ended 30th April, 2023
Year ended 30th April, 2022
Non-
Capital
Non-
Capital
Net
current
expendi-
Net
current
expendi-
Revenue
assets
assets
ture
Revenue
assets
assets
ture
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
UK*
55,867
82,669
114,235
21,533
38,599
77,447
102,254
19,670
Rest of Europe
28,367
10,636
4,224
790
21,388
8,648
3,728
1,009
USA
19,854
-
-
-
14,046
-
-
-
Pacific Basin
34,725
15,982
7,029
330
31,085
15,867
6,703
278
Rest of World
46,929
19,870
8,930
1,871
38,990
17,781
8,004
906
Total
185,742
129,157
134,418
24,524
144,108
119,743
120,689
21,863
* The prior year comparative for non-current assets has been adjusted to remove £2,741,000 of derivative assets.
64
NOTES TO THE FINANCIAL STATEMENTS
4.
Revenue
The following tables provide an analysis of revenue by geographical market and by product line.
Geographical market
Year ended 30th April, 2023
Year ended 30th April, 2022
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
UK
41,112
14,755
55,867
25,261
13,338
38,599
Rest of Europe
21,269
7,098
28,367
13,304
8,084
21,388
USA
19,141
713
19,854
13,398
648
14,046
Pacific Basin
12,253
22,472
34,725
9,457
21,628
31,085
Rest of World
29,992
16,937
46,929
26,185
12,805
38,990
Total
123,767
61,975
185,742
87,605
56,503
144,108
Product lines
Year ended 30th April, 2023
Year ended 30th April, 2022
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
Standard products and
consumables
13,767
61,975
75,742
12,155
56,503
68,658
Bespoke products – point in time
30,002
-
30,002
9,992
-
9,992
Point in time revenue
43,769
61,975
105,744
22,147
56,503
78,650
Minimum period contracts
4,335
-
4,335
3,804
-
3,804
Bespoke products – over time
75,663
-
75,663
61,654
-
61,654
Over time revenue
79,998
-
79,998
65,458
-
65,458
Total revenue
123,767
61,975
185,742
87,605
56,503
144,108
The following table present information about receivables, work in progress, contract assets and liabilities
from contracts with customers.
2023
2022
£’000
£’000
Trade receivables due within one year (note 18)
…
…
…
…
…
…
28,094
22,529
Trade receivables due after more than one year (note 18) …
…
…
…
…
-
1,191
Work in progress (note 17) …
…
…
…
…
…
…
…
…
…
13,001
10,161
Contract assets
…
…
…
…
…
…
…
…
…
…
…
16,257
12,331
Contract liabilities
…
…
…
…
…
…
…
…
…
…
…
(32,747)
(14,749)
NOTES TO THE FINANCIAL STATEMENTS
4. Revenue (continued)
Product lines (continued)
2023
2022
£’000
£’000
Revenue recognised in the year, which was included in the contract liability
balance at the beginning of the period …
…
…
…
…
…
…
…
7,711
7,182
Revenue recognised from performance obligations, which were satisfied
(or partially satisfied) in previous periods*
…
…
…
…
…
…
…
5,259
3,794
Increased costs on contracts**……
…
…
…
…
…
…
…
(995)
(1,145)
Release of increased cost of contracts**…
…
…
…
…
…
…
-
1,284
*
These figures relate to contract modifications, which are recognised only when there is a high level of certainty.
**
During the year the Group recognised additional costs on contracts that were over and above the forecasted costs for
those contracts, which reduces revenue in the year. These contracts still remain profitable.
The Group reviewed the contract assets at year end and for all contracts did not have to make any impairment provision.
Incremental costs of obtaining contracts lasting less than one year, are recognised as an expense, when incurred, in
accordance with the practical expedient in IFRS 15, paragraph 94.
The Group’s revenue is not significantly impacted by seasonal or cyclical events. The potential risk of the loss of any key
customer is limited as, typically, no single customer accounts for more than 10% of annual turnover.
Performance obligations
A performance obligation is the value of work still to complete on a contract.
The aggregate amount of the transaction price allocated to the performance obligations for longer-term contracts,
which are unsatisfied (or partially unsatisfied) as at the end of the reporting period is shown below.
2023
2022
£’000
£’000
Performance obligations due to be satisfied within one year…
…
…
…
42,316
40,114
Performance obligations due to be satisfied between 2-3 years …
…
…
…
59,575
17,746
Performance obligations due to be satisfied between 4-5 years …
…
…
…
33,494
19,959
Performance obligations due to be satisfied after more than 5 years
…
…
…
10,644
-
146,029
77,819
The Group has applied the practical expedient in IFRS 15, paragraph 121, and has not disclosed the remaining
performance obligations for contracts which have an original expected duration of one year or less.
66
NOTES TO THE FINANCIAL STATEMENTS
5. Expenses and auditor’s remuneration
The following are included in profit before taxation:
2023
2022
Charged / (credited) to the statement of profit or loss
£’000
£’000
Depreciation:
Owned assets …
…
…
…
…
…
…
…
…
…
…
6,272
6,202
Right-of-use assets …
…
…
…
…
…
…
…
…
…
1,198
1,192
Amortisation and impairment of intangible assets
…
…
…
…
…
1,257
1,572
Loss / (profit) on sale of other tangible fixed assets
…
…
…
…
…
134
(18)
Research expenditure
…
…
…
…
…
…
…
…
…
…
3,783
4,507
(Reversal) / impairment of trade receivables
charged to the statement of profit or loss
…
…
…
…
…
…
…
(237)
188
Realised currency gains …
…
…
…
…
…
…
…
…
…
(678)
(202)
Unrealised currency losses / (gains) …
…
…
…
…
…
…
…
615
(2,385)
Mark to market currency derivative losses …
…
…
…
…
…
156
1,212
Hedge reserve ineffectiveness …
…
…
…
…
…
…
…
…
442
(362)
Fees receivable by the auditor and the auditor’s associates in respect of:
Audit of these financial statements
…
…
…
…
…
…
…
80
66
Audit of the financial statements of subsidiaries
…
…
…
…
…
344
282
Expenses relating to short-term property leases …
…
…
…
…
…
300
304
Expenses relating to short-term plant and equipment leases …
…
…
…
188
130
Expenses relating to leases of low-value assets
…
…
…
…
…
…
11
12
Government grants received……
…
…
…
…
…
…
…
(331)
(397)
The analysis of the mark to market currency derivative losses and hedge ineffectiveness has been corrected for the
previous year. The mark to market derivative gains / losses and ineffectiveness are reported within cost of sales.
6. Staff numbers and costs
The
average
number
of
persons
employed
by
the
Group
(including
Directors)
during
the
year,
analysed
by
category, was as follows:
2023
2022
Number
Number
Subsidiary employees…
…
…
…
…
…
…
…
…
…
1,093
1,062
Goodwin PLC Company employees …
…
…
…
…
…
…
…
51
50
1,144
1,112
2023
2022
The aggregate payroll costs of these persons were as follows:
£’000
£’000
Wages and salaries …
…
…
…
…
…
…
…
…
…
44,125
38,894
Social security costs…
…
…
…
…
…
…
…
…
…
4,489
4,513
Other pension costs …
…
…
…
…
…
…
…
…
…
1,461
1,338
50,075
44,745
2023
2022
Payroll costs are reported as follows:
£’000
£’000
Cost of sales … …
Administrative expenses
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
NOTES TO THE FINANCIAL STATEMENTS
7. Finance costs (net)
2023
2022
£’000
£’000
Interest income
…
…
…
…
…
…
…
…
…
…
…
93
157
Interest expense on lease liabilities
…
…
…
…
…
…
…
…
266
121
Interest expenses on bank loans and overdrafts …
…
…
…
…
…
1,756
1,292
Capitalised interest on assets in the course of construction
…
…
…
…
(491)
(87)
Interest expense
…
…
…
…
…
…
…
…
…
…
…
1,531
1,326
Finance costs (net)
…
…
…
…
…
…
…
…
…
…
1,438
1,169
The average interest rate used to calculate capitalised interest was 3.13% (2022: 2.57%). This takes into account the
benefit of the interest rate swap.
8. Taxation
Recognised in the statement of profit or loss
2023
2022
Current tax expense
£’000
£’000
Current year …
…
…
…
…
…
…
…
…
…
…
2,678
2,820
Under / (over) provision in prior years …
…
…
…
…
…
…
191
193
Deferred tax expense
2,869
3,013
Origination and reversal of temporary differences
– current year (see below)
…
…
…
…
…
…
…
…
1926
1,381
Origination and reversal of temporary differences
– current year rate differences …
…
…
…
…
…
…
…
596
-
Origination and reversal of temporary differences
– under / (over) provision in prior years
…
…
…
…
…
…
225
(85)
Origination and reversal of temporary differences
– rate change to prior year (see below)
…
…
…
…
…
…
-
2,012
2,747
3,308
Total tax expense …
…
…
…
…
…
…
…
…
…
…
5,616
6,321
UK corporation tax
The tax charge on the face of the profit and loss is the tax applicable to the profits of each Group company calculated at
their country tax rate. Due to the high capital expenditure of the UK element of the Group, where there are, in the UK, 100%
first year allowances and the Super Deduction tax scheme that the UK Group companies could utilise in the year, this has
meant for certain assets there was a combined 130% deduction against taxable profits. This has resulted in a lower amount
of tax paid in the UK for both financial year 2022 and financial year 2023 and a significant deferred tax charge of 50% of the
calculated tax, which will not be paid until some time in the future.
Origination and reversal of temporary differences – current year
The majority of the deferred tax expense shown above comes from the difference between the accounting treatment and
the tax treatment of property, plant and equipment expenditure. Under the current UK tax regime, most of our property,
plant and equipment expenditure is 100% offset against our profits in the year of expenditure and so produces a very low or
zero rate of tax actually payable. In future years, however, the tax benefit gained in year one reverses over time as future
profits are taxed without further offset from this expenditure.
Origination and reversal of temporary differences – rate change to prior year
With the change in UK tax rate to 25%, all the provisions have been calculated at the new rate in line with legislation.
68
NOTES TO THE FINANCIAL STATEMENTS
8. Taxation (continued)
Reconciliation of effective tax rate
2023
2022
£’000
£’000
Profit before taxation
…
…
…
…
…
…
…
…
…
…
22,129
19,941
Tax using the UK corporation tax rate of 19.49% (2022:
19%) …
…
…
…
4,313
3,789
Tax effect of amounts which are not deductible / (taxable)
in calculating taxable income:
Impact of super-deduction on property, plant and equipment additions
…
…
(337)
(506)
Non-taxable income
…
…
…
…
…
…
…
…
…
…
(17)
(27)
Non-deductible expenses
…
…
…
…
…
…
…
…
…
59
30
Other permanent timing differences …
…
…
…
…
…
…
…
(20)
295
Under provision in prior years …
…
…
…
…
…
…
…
…
416
108
Losses not recognised
…
…
…
…
…
…
…
…
…
…
160
171
Share-based payments
…
…
…
…
…
…
…
…
…
…
-
(40)
Losses utilised where a deferred tax asset was not recognised
…
…
…
-
(151)
Rate change to prior year
…
…
…
…
…
…
…
…
…
-
2,012
Rate differences…
…
…
…
…
…
…
…
…
…
…
596
-
Withholding tax unrelieved
…
…
…
…
…
…
…
…
…
261
355
Difference in overseas tax rates
…
…
…
…
…
…
…
…
199
297
Effect of equity accounting for associate
…
…
…
…
…
…
…
(14)
(12)
Total tax expense …
…
…
…
…
…
…
…
…
…
…
5,616
6,321
Where subsidiary companies have incurred losses in the year, which are unlikely to be relieved against future profits in
the next twelve months, deferred tax assets are not recognised.
Withholding tax unrelieved represents withholding tax deducted on dividends and royalties from overseas subsidiaries
and associates.
Deferred tax recognised directly in equity
Deferred tax (charge) / credit on the cash flow hedge included
in the consolidated statement of comprehensive income
…
9. Earnings per share
Ordinary shares in issue
Opening shares in issue …
…
…
…
…
…
…
Shares issued in the year (note 27)
…
…
…
…
…
Total ordinary shares (issued and options)
…
…
…
Weighted average number of ordinary shares in issue …
…
Relevant profits attributable to ordinary shareholders
…
…
Basic earnings per share …
…
…
…
…
…
…
Diluted earnings per share
…
…
…
…
…
…
10. Dividends
Paid ordinary dividends during the year in respect of prior years
107.80p (2022: 102.24p) per qualifying ordinary share …
…
2023
2022
£’000
£’000
…
…
…
(919)
1,114
Number of
ordinary shares
2023
2022
…
…
…
7,689,600
7,526,400
…
…
…
-
163,200
…
…
…
7,689,600
7,689,600
…
…
…
7,689,600
7,673,951
2023
2022
£’000
£’000
…
…
…
15,904
12,980
2023
2022
pence
pence
…
…
…
206.81
169.14
…
…
…
206.81
169.14
2023
2022
£’000
£’000
…
…
…
8,289
7,862
After the balance sheet date an ordinary dividend of 115p per qualifying ordinary share was proposed by the Directors
(2022: Ordinary dividend of 107.80p).
The proposed current year ordinary dividend of £8,636,000 has not been provided for within these financial statements
(2022: Proposed ordinary dividend of £8,289,000 was not provided for within the comparative figures).
69
NOTES TO THE FINANCIAL STATEMENTS
11. Property, plant and equipment
Assets in
Other
course of
Land and
Plant and
equipment
construc-
buildings
machinery
tion
Total
Cost
£’000
£’000
£’000
£’000
£’000
Balance at 1st May, 2021
…
…
…
41,998
81,579
6,955
7,779
138,311
Additions …
…
…
…
…
…
5,814
2,653
515
7,371
16,353
Reclassification …
…
…
…
…
3,737
1,721
(120)
(5,338)
-
Disposals …
…
…
…
…
…
(6)
(1,205)
(662)
-
(1,873)
Exchange adjustment …
…
…
…
661
245
83
53
1,042
Balance at 30th April, 2022
…
…
52,204
84,993
6,771
9,865
153,833
Depreciation
Balance at 1st May, 2021
…
…
…
9,226
46,857
5,165
-
61,248
Charged in year …
…
…
…
…
1,345
4,413
444
-
6,202
Disposals …
…
…
…
…
…
-
(903)
(647)
-
(1,550)
Exchange adjustment …
…
…
…
139
105
95
-
339
Balance at 30th April, 2022
…
…
10,710
50,472
5,057
-
66,239
Net book value
At 1st May, 2021
…
…
…
…
32,772
34,722
1,790
7,779
77,063
At 30th April, 2022 …
…
…
…
41,494
34,521
1,714
9,865
87,594
Cost
Balance at 1st May, 2022
…
…
…
52,204
84,993
6,771
9,865
153,833
Additions …
…
…
…
…
…
633
3,692
364
16,492
21,181
Reclassification – others
…
…
…
-
3,612
37
(3,649)
-
Transfer to / from ROU*
…
…
…
-
(336)
191
-
(145)
Disposals …
…
…
…
…
…
-
(1,935)
(719)
-
(2,654)
Exchange adjustment …
…
…
…
(461)
(228)
(68)
(71)
(828)
Balance at 30th April, 2023
…
…
52,376
89,798
6,576
22,637
171,387
Depreciation
Balance at 1st May, 2022
…
…
…
10,710
50,472
5,057
-
66,239
Charged in year …
…
…
…
…
1,437
4,335
500
-
6,272
Transfer to / from ROU*
…
…
…
-
14
94
-
108
Disposals …
…
…
…
…
…
(3)
(1,699)
(600)
-
(2,302)
Exchange adjustment …
…
…
…
(82)
(45)
(46)
-
(173)
Balance at 30th April, 2023
…
…
12,062
53,077
5,005
-
70,144
Net book value
At 30th April, 2023
…
…
…
40,314
36,721
1,571
22,637
101,243
*Assets are transferred from the right-of-use assets category on the settlement of a lease purchase agreement and
payment of the option to purchase fee.
Additions
During the year the Group expended £21.18 million on property, plant and equipment. The major items purchased during
the year are expenditures on the infrastructure works for Goodwin Steel Castings; on our new calciner plant at Hoben
and plant for Duvelco.
Other equipment
Other equipment comprises motor vehicles, IT hardware and office equipment.
70
NOTES TO THE FINANCIAL STATEMENTS
11.
Property, plant and equipment (continued)
Assets in course of construction
2023
2022
£’000
£’000
Land and buildings
…
…
…
…
…
…
…
…
…
…
4,280
1,823
Plant and machinery
…
…
…
…
…
…
…
…
…
…
18,357
8,042
22,637
9,865
Depreciation
Depreciation is reported as follows:
2023
2022
£’000
£’000
Cost of sales…
…
…
…
…
…
…
…
…
…
…
6,068
5,942
Administrative expenses
…
…
…
…
…
…
…
…
…
204
260
6,272
6,202
Security
Noreva GmbH's land and buildings, with a net book value of £2.9 million (2022: £2.6 million), and other land within the
Group with a net book value of £4.5 million (2022: £4.5 million) have been pledged as security for borrowings listed in
note 21. The Group has also pledged three furnaces, with a net book value of £4.8 million (2022: £5.1 million) and a
calciner with a net book value of £5.3 million (2022: £nil) as security for bank loans.
12. Right-of-use assets
Land and
Plant and
Other
buildings
machinery
equipment
Total
Cost
£’000
£’000
£’000
£’000
Balance at 1st May, 2021
…
…
…
2,728
721
1,459
4,908
Additions
…
…
…
…
…
…
123
3,215
385
3,723
Disposals
…
…
…
…
…
…
(107)
(35)
-
(142)
Exchange adjustment
…
…
…
…
17
(18)
(2)
(3)
Balance at 30th April, 2022
2,761
3,883
1,842
8,486
Depreciation
Balance at 1st May, 2021…
…
…
…
785
224
208
1,217
Charged in year
…
…
…
…
…
457
351
384
1,192
Disposals
…
…
…
…
…
…
(107)
-
-
(107)
Exchange adjustment
…
…
…
…
(1)
(5)
(1)
(7)
1,134
570
591
2,295
Net book value
At 1st May, 2021 …
…
…
…
…
1,943
497
1,251
3,691
At 30th April, 2022
…
…
…
…
1,627
3,313
1,251
6,191
Cost
Balance at 1st May, 2022
…
…
…
2,761
3,883
1,842
8,486
Additions
…
…
…
…
…
…
6
1,316
197
1,519
Transfer to / from property, plant and equipment
-
336
(191)
145
Disposals
…
…
…
…
…
…
(79)
(107)
(24)
(210)
Exchange adjustment
…
…
…
…
(42)
24
5
(13)
Balance at 30th April, 2023
2,646
5,452
1,829
9,927
Depreciation
Balance at 1st May, 2022
…
…
…
1,134
570
591
2,295
Charged in year
…
…
…
…
…
480
289
429
1,198
Transfer to property, plant and equipment
-
(14)
(94)
(108)
Disposals
…
…
…
…
…
…
(79)
(107)
(24)
(210)
Exchange adjustment
…
…
…
…
(24)
10
3
(11)
Balance at 30th April, 2023
1,511
748
905
3,164
Net book value
At 30th April, 2023
1,135
4,704
924
6,763
71
NOTES TO THE FINANCIAL STATEMENTS
12.
Right-of-use assets (continued)
Depreciation
Depreciation is reported as follows:
Cost of sales
…
…
…
Administrative expenses
…
2023
2022
£’000
£’000
…
…
…
…
…
…
…
…
731
735
…
…
…
…
…
…
…
…
467
457
1,198
1,192
13.
Investments in subsidiaries
The Group has the following principal subsidiaries. Non-principal subsidiaries are listed in note 30:
Company name
Registered
Country of
Class of
Subsidiaries:
address*
Incorporation
shares held
% held
Mechanical Engineering:
Goodwin Steel Castings Limited
…
…
…
1
England and Wales Ordinary
100
Goodwin International Limited …
…
…
…
1
England and Wales Ordinary
100
Easat Radar Systems Limited
…
…
…
…
1
England and Wales Ordinary
77
Goodwin Korea Company Limited
…
…
…
3
South Korea
Ordinary
95
Goodwin Pumps India Private Limited
…
…
4
India
Ordinary
100
Goodwin Shanghai Company Limited …
…
…
5
China
Ordinary
100
Noreva GmbH
…
…
…
…
…
…
6
Germany
Ordinary
100
Goodwin Indústria e Comércio de Bombas
Submersas Ltda
…
…
…
…
…
…
8
Brazil
Ordinary
100
Internet Central Limited
…
…
…
…
…
1
England and Wales Ordinary
100
Goodwin Submersible Pumps Australia Pty. Limited
9
Australia
Ordinary
100
Metal Proving Services Limited …
…
…
…
1
England and Wales Ordinary
100
NRPL Aero Oy
…
…
…
…
…
…
10
Finland
Ordinary
77
Goodwin Submersible Pumps Africa Pty. Limited
…
15
South Africa
Ordinary
100
Duvelco Limited
…
…
…
…
…
…
1
England and Wales Ordinary
100
Refractory Engineering:
Goodwin Refractory Services Limited …
…
…
1
England and Wales Ordinary
100
Dupré Minerals Limited
…
…
…
…
…
1
England and Wales Ordinary
100
Hoben International Limited
…
…
…
…
2
England and Wales Ordinary
100
Goodwin Refractory Services India Private Limited…
4
India
Ordinary
100
Siam Casting Powders Limited …
…
…
…
11
Thailand
Ordinary
58
Ultratec Jewelry Supplies Limited
…
…
…
12
China
Ordinary
75.5
SRS (Qingdao) Casting Materials Company Limited
13
China
Ordinary
75.5
Jewelry Plaster Limited
…
…
…
…
…
14
Thailand
Ordinary
75
*The registered address for each company can be found in note 34.
All of the above companies are included as part of the consolidated accounts. All the companies are involved in mechanical or
refractory engineering, with the exception of Internet Central Limited, which is an internet service provider.
Non-controlling interests (NCI)
The following subsidiaries each have non-controlling interests:
Company name
Registered
Country of
Class of
Mechanical Engineering:
address*
Incorporation
shares held
% held
Easat Radar Systems Limited
…
…
…
…
1
England and Wales Ordinary
23
Goodwin Korea Company Limited
…
…
…
3
South Korea
Ordinary
5
NRPL Aero Oy
…
…
…
…
…
…
10
Finland
Ordinary
23
Refractory Engineering:
Jewelry Plaster Limited
…
…
…
…
…
14
Thailand
Ordinary
25
Jewelry Wax Limited
…
…
…
…
…
14
Thailand
Ordinary
25
Siam Casting Powders Limited …
…
…
…
11
Thailand
Ordinary
42
GRS Silicone Company Limited …
…
…
…
17
China
Ordinary
24.5
SRS (Qingdao) Casting Materials Company Limited
13
China
Ordinary
24.5
Shenzhen King-Top Modern Hi-Tech Company Limited 16
China
Ordinary
24.5
Ultratec Jewelry Supplies Limited
…
…
…
12
China
Ordinary
24.5
Ying Tai (UK) Limited
…
…
…
…
…
1
England and Wales Ordinary
24.5
*The registered address for each company can be found in note 34.
During the previous year, the Group acquired the non-controlling interests in Internet Central Limited for £430,000.
For further details, please refer to the Statement of Changes in Equity on page 51.
72
NOTES TO THE FINANCIAL STATEMENTS
13.
Investments in subsidiaries (continued) Non-
controlling interests (NCI) (continued)
The Board considers a material company to be one that has either 10% of the EBITDA or 10% of the net assets of the Group. As
such, the Board does not consider any of its subsidiary companies, which have non-controlling interests, to be material. The
financial information on all subsidiaries with non-controlling interests has been aggregated, analysing the data by segment, as the
entities in each segment have similar characteristics and risk profiles, to provide additional information on these companies.
Non-controlling interests (NCI) – movements in reserves by segment
Year ended 30th April, 2023
Year ended 30th April, 2022
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
Profit / (loss) allocated
to non-controlling
interests …
…
…
(264)
873
609
(463)
1,103
640
Dividends paid to
non-controlling
interests …
…
…
-
(556)
(556)
-
(808)
(808)
Accumulated reserves
held by non-controlling
interests …
…
…
(927)
5,337
4,410
(690)
5,123
4,433
The summarised financial information below represents the amounts in the financial statements of the subsidiaries,
before any intercompany eliminations, and does not reflect the Group’s share of those amounts.
Year ended 30th April, 2023
Year ended 30th April, 2022
Mechanical
Refractory
Mechanical
Refractory
Engineering
Engineering
Total
Engineering
Engineering
Total
£’000
£’000
£’000
£’000
£’000
£’000
Non-current assets
…
2,125
11,148
13,273
3,436
11,955
15,391
Current assets …
…
9,026
16,882
25,908
6,824
16,264
23,088
Current liabilities
…
(13,019)
(6,587)
(19,606)
(11,651)
(6,822)
(18,473)
Non-current liabilities
(1,104)
(110)
(1,214)
(439)
(305)
(744)
Total net assets of
companies with
non-controlling interests
(2,972)
21,333
18,361
(1,830)
21,092
19,262
Revenue of companies
with non-controlling
interests …
…
…
19,692
24,814
44,506
7,655
23,455
31,110
Profit / (loss) for the
year of companies with
non-controlling interests
(1,191)
3,481
2,290
(2,013)
4,356
2,343
Total comprehensive
income of companies with
non-controlling interests
(1,240)
3,922
2,682
(1,571)
3,544
1,973
Net cash flow from
operating activities
…
(212)
2,357
2,145
(324)
3,072
2,748
Net cash flow from
investing activities
…
(8)
(255)
(263)
-
(181)
(181)
Net cash flow from
financing activities
…
(23)
(3,059)
(3,082)
(32)
(3,307)
(3,339)
73
NOTES TO THE FINANCIAL STATEMENTS
14.
Investment in associate
The Group’s share of profit after tax in its immaterial associate for the year ended 30th April, 2023 was £65,000
(2022: £63,000).
Summary financial information of the Group’s share of its associate company is as follows:
2023
2022
£’000
£’000
Balance at 1st May
…
…
…
…
…
…
…
…
…
…
896
829
Profit before tax …
…
…
…
…
…
…
…
…
…
…
79
75
Tax…
…
…
…
…
…
…
…
…
…
…
…
…
(14)
(12)
Exchange adjustment…
…
…
…
…
…
…
…
…
…
3
4
Balance at 30th April …
…
…
…
…
…
…
…
…
…
964
896
Assets
…
…
…
…
…
…
…
…
…
…
…
…
974
914
Liabilities
…
…
…
…
…
…
…
…
…
…
…
…
(10)
(18)
964
896
15. Intangible assets
Brand
names
and
Manufact-SoftwareDevelop-
intellectual
uring
and
ment
Goodwill
property
rights
Licences
costs
Total
£’000
£’000
£’000
£’000
£’000
£’000
Cost
Balance at 1st May, 2021
10,218
9,645
5,493
1,391
9,821
36,568
Additions
…
…
…
-
159
-
123
1,505
1,787
Disposals
…
…
…
-
-
(594)
(3)
-
(597)
Exchange adjustment
…
(208)
(142)
-
(11)
-
(361)
Balance at 30th April, 2022
10,010
9,662
4,899
1,500
11,326
37,397
Amortisation and impairment
Balance at 1st May, 2021
339
6,463
2,563
1,046
1,344
11,755
Amortisation for the year
-
511
324
163
559
1,557
Impairment
…
…
-
-
-
-
15
15
Disposals
…
…
…
-
-
(594)
(3)
-
(597)
Exchange adjustment
…
-
(140)
1
(11)
-
(150)
Balance at 30th April, 2022
339
6,834
2,294
1,195
1,918
12,580
Net book value
At 1st May, 2021 …
…
9,879
3,182
2,930
345
8,477
24,813
At 30th April, 2022
…
9,671
2,828
2,605
305
9,408
24,817
Cost
Balance at 1st May, 2022
10,010
9,662
4,899
1,500
11,326
37,397
Additions …
…
…
-
525
56
47
1,196
1,824
Disposals
…
…
…
-
-
-
(121)
-
(121)
Exchange adjustment
…
61
3
-
18
-
82
Balance at 30th April, 2023
10,071
10,190
4,955
1,444
12,522
39,183
Amortisation and impairment
Balance at 1st May, 2022
339
6,834
2,294
1,195
1,918
12,580
Amortisation for the year
-
280
316
139
522
1,257
Disposals
…
…
…
-
-
-
(120)
-
(120)
Exchange adjustment
-
-
-
17
-
17
Balance at 30th April, 2023
339
7,114
2,610
1,231
2,440
13,734
Net book value
At 30th April, 2023
…
9,732
3,076
2,345
213
10,082
25,448
74
NOTES TO THE FINANCIAL STATEMENTS
15.
Intangible assets (continued)
Customer lists are included within brand names and intellectual property or within manufacturing rights, depending on the
nature of the acquisition; non-compete agreements are disclosed within manufacturing rights. During the year, the Group
added to its portfolio of intangible assets.
Amortisation and impairment charges are reported in cost of sales in the statement of profit or loss.
Impairment testing for cash-generating units containing intangible assets
The Group tests intangible assets annually for impairment or more frequently if there are indications that an intangible
asset might be impaired. For the purpose of impairment testing, an intangible asset is allocated to the relevant subsidiary
(cash generating unit (“CGU”), which is the lowest level within the Group at which the intangible asset is monitored for
internal management purposes.
2023
Other
2022
Other
intangible
intangible
Property
assets
Property
assets
plant and
(excluding
plant and
(excluding
equipment
Goodwill
software)
Total
equipment
Goodwill
software)
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Mechanical Engineering
Duevelco
12,156
-
1,837
13,993
3,180
-
1,401
4,581
Noreva
4,172
4,623
-
8,795
3,669
4,575
-
8,244
Easat Group
395
1,228
3,050
4,673
474
1,215
3,254
4,943
Other
-
-
3,102
3,102
-
-
3,285
3,285
Refractory Engineering
Goodwin Refractory
Services Holdings Ltd
3,993
3,346
23
7,362
4,340
3,346
-
7,686
Perlite and
-
vermiculite
828
1,801
2,629
946
-
2,034
2,980
Castaldo
217
-
1,739
1,956
298
-
1,841
2,139
Other
-
535
3,951
4,486
535
3,027
3,561
Total
21,761
9,732
15,503
46,996
12,907
9,671
14,842
37,419
An impairment test is a comparison of the carrying value of the assets of a CGU to their recoverable amount, based on a
value-in-use calculation. The recoverable amount is the greater of value-in-use and fair value less costs of disposal.
Where the recoverable amount is less than the carrying value, an impairment results. During the year, each CGU
containing an intangible asset was separately assessed and tested for impairment.
As part of testing intangible assets for impairment detailed forecasts of operating cash flows for the next five years are
used, which are based on budgets and plans approved by the Board. The forecasts represent the best estimate of future
performance of the CGU based on past performance and expectations for the market development of the CGU.
A number of key assumptions are used as part of impairment testing. These key assumptions, such as the CGU’s position
within its relevant market; its ability to generate profitable orders within that market; expected growth rates both in the
market and geographically, are made by management who also take into account past experience and knowledge of
forecast future performance together with other relevant external sources of information.
The projections use various growth rates, such as increases in revenue and / or increases in gross margin, whichever is
relevant to that CGU, consistent with the profit forecasts of the CGU for the next five years. The growth rates are identified
by experienced managers within that CGU, who have significant experience and knowledge of that CGU and its market
place. In the current and previous financial year, a zero growth rate has been assumed for any terminal values. The
forecasts are then discounted at an appropriate pre-tax weighted average cost of capital rate considering the perceived
levels of risk for that CGU. Further sensitivity tests are then performed reducing the discounted cash flows by 10%, which
the Group sees as being an appropriate reduction due to the prudent forecasts that it has already used within the testing,
and also increasing the discount rate by a range of up to 10% to confirm there is no need to consider further a need for
impairment.
75
NOTES TO THE FINANCIAL STATEMENTS
15. Intangible assets (continued)
Impairment testing for cash-generating units containing intangible assets (continued)
The table below shows the range of rates used in the impairment testing.
2023
2022
Mechanical Engineering
£’000
£’000
Growth rates
…
…
…
…
…
…
…
…
…
…
…
0-8%
0-15%
Pre-tax weighted average cost of capital
…
…
…
…
…
…
…
11-13%
12-15%
Refractory Engineering
Growth rates
…
…
…
…
…
…
…
…
…
…
…
0-6%
0-4%
Pre-tax weighted average cost of capital
…
…
…
…
…
…
…
12%
12-13%
Strategic investments in new and high growth CGUs are excluded from the growth rates above as the percentage growth
from nil is not meaningful. This predominantly relates to one CGU with an investment of £ 14 million, for new products
where the Group is forecasting the revenues to increase significantly. The growth being forecasted for this CGU is
significantly higher than the other more established CGUs, whereby including them in the table would distort the growth
forecast reported for the established CGUs.
This growth expectation is described as a key judgement in note 2. We have reviewed the forecasted revenues of these
sensitive CGUs and then stressed the revenues by reducing them to less than 50% of the expected forecasted revenues
and can confirm that at these dramatically reduced revenue levels none of the three intangible assets would need to be
impaired.
The estimates and assumptions made in connection with the impairment testing could differ from future actual results of
operations and cash flows. A reasonably likely variation in the assumptions, as disclosed,
would not give rise to an impairment. However, future events could cause the Group to conclude that impairment
indicators exist and that the asset values associated with a given operation have become impaired.
Duvelco
The Company has invested circa £14 million in the area of high performance polymer resins. The Company will
commence a period of testing and commissioning of the plant in Q2 and Q3 of financial year 2024 before any commercial
activity takes place. The judgement of the Board is that the market potential here is significant and that future profitability is
expected to be strong. Accordingly, the Directors’ do not see a need to impair our investment in this area.
16. Long-term derivative assets
2023
2022
Notes
£’000
£’000
Interest rate swap …
…
…
…
…
…
…
…
…
…
28 (d)
4,802
2,466
Derivative assets designated as cash flow hedging instruments
…
…
28 (d)
1,130
275
5,932
2,741
17. Inventories
2023
2022
Net balances
£’000
£’000
Raw materials and consumables
…
…
…
…
…
…
…
…
23,101
19,828
Work in progress …
…
…
…
…
…
…
…
…
…
…
13,001
10,161
Finished goods…
…
…
…
…
…
…
…
…
…
…
11,853
10,375
47,955
40,364
Provisions held
Raw materials and consumables
…
…
…
…
…
…
…
…
(814)
(438)
Work in progress …
…
…
…
…
…
…
…
…
…
…
(1,283)
(1,513)
Finished goods…
…
…
…
…
…
…
…
…
…
…
(495)
(482)
(2,592)
(2,433)
Inventory impaired during the year …
…
…
…
…
…
…
…
(1,099)
(1,390)
Release of inventory impairment
…
…
…
…
…
…
…
…
885
-
The prior year comparative for the provision against work in progress has been amended.
76
NOTES TO THE FINANCIAL STATEMENTS
18. Trade and other receivables
Balances due within one year
2023
2022
£’000
£’000
Trade receivables …
…
…
…
…
…
…
…
…
…
…
28,094
22,529
Other financial assets
…
…
…
…
…
…
…
…
…
…
1,663
1,188
Advance payments to suppliers
…
…
…
…
…
…
…
…
857
1,235
Prepayments and other non-financial assets
…
…
…
…
…
…
3,918
3,635
Deferred tax asset (see note 26)
…
…
…
…
…
…
…
…
57
60
34,589
28,647
Balances due after more than one year
Trade receivables …
…
…
…
…
…
…
…
…
…
…
-
1,191
Financial assets…
…
…
…
…
…
…
…
…
…
…
29,757
24,908
Non-financial assets
…
…
…
…
…
…
…
…
…
…
4,832
4,930
34,589
29,838
19. Derivative financial assets
2023
2022
Notes
£’000
£’000
Interest rate swap …
…
…
…
…
…
…
…
…
…
28 (d)
1,127
274
Derivative assets designated as cash flow hedging instruments
…
…
28 (d)
1,429
572
Derivative assets not designated in a cash flow relationship …
…
…
28 (d)
128
365
2,684
1,211
The analysis between hedged and unhedged derivative assets in the previous year has been amended.
20. Cash and cash equivalents
2023
2022
£’000
£’000
Cash in hand
…
…
…
…
…
…
…
…
…
…
…
99
73
Bank balances
…
…
…
…
…
…
…
…
…
…
…
19,562
11,578
19,661
11,651
21.
Borrowings
Information is provided below about the contractual terms of the Group’s lease liabilities, bank loans and borrowings.
The bank loans repayable by instalment are secured against a property in Germany together with furnaces and land in
the UK (refer to note 11). For more information about the Group’s exposure to interest rate and foreign currency risk, see
note 28.
Year ended 30th April, 2023
Year ended 30th April, 2022
Non-current
Current
Total
Non-current
Current
Total
liabilities
liabilities
liabilities
liabilities
liabilities
liabilities
£’000
£’000
£’000
£’000
£’000
£’000
Bank overdrafts…
…
-
119
119
-
-
-
Bank loans - repayable
by instalments …
…
6,985
1,154
8,139
8,059
1,005
9,064
Bank loans - rolling
credit facilities …
…
36,000
3,500
39,500
28,000
-
28,000
Other loans…
…
-
-
-
-
202
202
Lease liabilities …
…
4,271
1,956
6,227
4,317
1,557
5,874
47,256
6,729
53,985
40,376
2,764
43,140
77
NOTES TO THE FINANCIAL STATEMENTS
21.
Borrowings (continued)
Reconciliation of liabilities arising from financing activities
Bank
overdrafts
Bank loans -
Bank loans -
used for cash
repayable by
rolling credit
Lease
management
instalments
facilities
Other loans
liabilities
Total
£’000
£’000
£’000
£’000
£’000
£’000
Opening balance at
1st May, 2021
…
…
-
5,299
26,000
-
3,374
34,673
Non-cash movements
-
-
-
-
3,630
3,630
Cash flows
…
…
-
3,817
2,000
202
(1,153)
4,866
Foreign exchange
movement
…
…
-
(52)
-
-
23
(29)
Closing balance
30th April, 2022
-
9,064
28,000
202
5,874
43,140
Opening balance at
1st May, 2022
…
…
-
9,064
28,000
202
5,874
43,140
Non-cash movements
-
-
-
-
2,242
2,242
Change in bank
overdrafts
…
…
119
-
-
-
-
119
Cash flows
…
…
-
(979)
11,500
(202)
(1,874)
8,445
Foreign exchange
movement
…
…
-
54
-
-
(15)
39
Closing balance
-
30th April, 2023
119
8,139
39,500
6,227
53,985
During the current year and previous year, additional leases have been taken out to fund ongoing Green Projects.
Contractual undiscounted cash flows
Year ended 30th April, 2023
Year ended 30th April, 2022
Minimum
Minimum
loan
loan
payments
Interest
Principal
payments
Interest
Principal
£’000
£’000
£’000
£’000
£’000
£’000
Bank loans - repayable
by instalments
Less than one year
…
1,514
360
1,154
1,234
229
1,005
Between two and
three years
…
…
2,739
599
2,140
2,441
368
2,073
Between four and
five years
…
…
1,449
463
986
1,993
247
1,746
More than five years …
5,347
1,488
3,859
4,985
745
4,240
11,049
2,910
8,139
10,653
1,589
9,064
Lease liabilities
Less than one year
…
2,231
275
1,956
1,684
127
1,557
Between two and
three years
…
…
3,160
289
2,871
2,674
133
2,541
Between four and
five years
…
…
1,182
44
1,138
1,463
37
1,426
More than five years …
268
6
262
362
12
350
6,841
614
6,227
6,183
309
5,874
78
NOTES TO THE FINANCIAL STATEMENTS
22. Trade and other liabilities
2023
2022
£’000
£’000
Trade payables…
…
…
…
…
…
…
…
…
…
…
…
22,400
18,958
Other financial liabilities…
…
…
…
…
…
…
…
…
…
…
988
1,929
Other taxation and social security
…
…
…
…
…
…
…
…
…
1,776
2,117
Accrued expenses…
…
…
…
…
…
…
…
…
…
…
…
6,062
4,001
Advance payments from customers …
…
…
…
…
…
…
…
…
539
255
31,765
27,260
Financial liabilities…
…
…
…
…
…
…
…
…
…
…
…
25,164
23,004
Non-financial liabilities …
…
…
…
…
…
…
…
…
…
…
6,601
4,256
31,765
27,260
23. Derivative financial liabilities
2023
2022
Notes
£’000
£’000
Derivative liabilities designated as cash flow hedging instruments …
…
…
28 (d)
1,773
2,144
Derivative liabilities not designated in a cash flow relationship
…
…
…
28 (d)
610
249
2,383
2,393
24. Provisions
2023
2022
£’000
£’000
Balance at 1st May
…
…
…
…
…
…
…
…
…
…
…
456
859
Increase in provision
…
…
…
…
…
…
…
…
…
…
…
249
167
Release of provision
…
…
…
…
…
…
…
…
…
…
…
(216)
(408)
Provision utilised …
…
…
…
…
…
…
…
…
…
…
…
-
(144)
Exchange adjustment
…
…
…
…
…
…
…
…
…
…
…
23
(18)
Balance at 30th April …
…
…
…
…
…
…
…
…
…
…
512
456
Warranty due within one year …
…
…
…
…
…
…
…
…
…
266
205
Warranty due after one year
…
…
…
…
…
…
…
…
…
…
246
251
Balance at 30th April …
…
…
…
…
…
…
…
…
…
…
512
456
Provisions include warranties for products sold which generally cover a period of between 1 and 3 years.
25. Long-term derivative liabilities
2023
2022
Notes
£’000
£’000
Derivative liabilities designated as cash flow hedging instruments ………28 (d)
-
1,643
-
1,643
79
NOTES TO THE FINANCIAL STATEMENTS
26.
Deferred tax assets and liabilities
Deferred tax balances are attributable to the following:
Year ended 30th April, 2023
Year ended 30th April, 2022
Assets
Liabilities
Net
Assets
Liabilities
Net
£’000
£’000
£’000
£’000
£’000
£’000
Property, plant
and equipment …
…
67
(10,159)
(10,092)
63
(8,344)
(8,281)
Intangible assets
…
-
(2,021)
(2,021)
-
(2,186)
(2,186)
Derivative financial
instruments
…
…
65
(144)
(79)
714
(702)
12
Tax losses
…
…
350
-
350
2,496
-
2,496
Other temporary
differences
…
…
684
(148)
536
430
(122)
308
1,166
(12,472)
(11,306)
3,703
(11,354)
(7,651)
Deferred tax balances are reported in the balance sheet as follows:
2023
2022
£’000
£’000
Deferred tax asset (see note 18)
…
…
…
…
…
…
…
…
57
60
Deferred tax liability
……
…
…
…
…
…
…
…
…
(11,363)
(7,711)
(11,306)
(7,651)
Share-
Property,
Derivative
based
Other
plant and
Intangible
financial
payments
Tax
temporary
equipment
assets
instruments
reserve
losses
differences
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Balance at
1st May, 2021
(4,382)
(1,686)
(436)
915
-
144
(5,445)
Recognised in
profit and loss
(3,891)
(477)
(666)
(915)
2,496
145
(3,308)
Recognised in
equity
-
-
1,114
-
-
-
1,114
Exchange
adjustment
(8)
(23)
-
-
19
(12)
Balance at
30th April, 2022
(8,281)
(2,186)
12
2,496
308
(7,651)
Balance at
1st May, 2022
(8,281)
(2,186)
12
-
2,496
308
(7,651)
Recognised in
profit and loss
(1,832)
165
828
-
(2,146)
238
(2,747)
Recognised in
equity
-
-
(919)
-
-
-
(919)
Exchange
adjustment
21
-
-
-
-
(10)
11
Balance at
30th April, 2023
(10,092)
(2,021)
(79)
350
536
(11,306)
When share options are exercised, the Group claims a corporation tax deduction based on the notional cost to the Group.
To avoid distorting the tax charge in the statement of profit or loss, the release of the deferred tax balance for the share
based payment reserve was reported within the statement of profit or loss in the previous year.
80
NOTES TO THE FINANCIAL STATEMENTS
26. Deferred tax assets and liabilities (continued)
Deferred tax assets not recognised on losses
2023
2022
£’000
£’000
Gross tax losses …………
…
…
…
…
…
…
…
2,348
2,364
Deferred tax assets not recognised …
…
…
…
…
…
…
…
521
500
The Group has not recognised a deferred tax asset against taxable losses incurred by some of its subsidiaries. Typically
these are subsidiaries, which are still in their formative years and, whilst profitability and the assoicated recoverability of
tax losses is expected in the long-term, it is deemed prudent to not recognise a deferred tax asset at this stage, as a result
of the incertainty
27. Capital and reserves
Share capital
2023
2022
Authorised, allotted, called up and fully paid:
£’000
£’000
7,689,600 (2022: 7,526,400) ordinary shares of 10p each
…
…
…
…
769
753
Issue of 163,200 ordinary shares of 10p each……
…
…
…
…
-
16
769
769
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at meetings of the Company.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements
of foreign operations.
Share-based payments reserve
The share-based payments reserve is a non cash-impacting provision, as required by IFRS 2, relating to the Equity Long
Term Incentive Plan, which vested at 1st May, 2019. Further details are included in note 35.
Cash flow hedge reserve and cost of hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedge
instruments related to hedged transactions that have not yet occurred. The cost of hedging reserve relates to the
associated costs attaching to the cash flow hedge reserve, such as counterparty risk and forward point adjustments.
Deferred tax
Asset / (liability)
2023
2022
Aggregate deferred tax balances recognised in equity:
£’000
£’000
Derivative financial instruments
……
……
……
…
…
(196)
723
28.
Financial risk management
The Group’s operations expose it to a variety of financial risks that include the effects of changes in market prices
(interest rates, foreign exchange rates and commodity prices), credit risk and liquidity. The Group has in place risk
management policies that seek to limit the adverse effects on the financial performance of the Group by using various
instruments and techniques.
Risk management policies have been set by the Board and applied by the Group.
a)
Credit risk
The Group’s financial assets are cash and cash equivalents; trade and other receivables; contract assets; derivative
financial assets; the carrying amounts of which represent the Group’s maximum exposure to credit risk in relation to
financial assets.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by
international credit rating agencies.
The Group’s credit risk is primarily attributable to its trade receivables and is managed through the following
processes:
i)
The majority of orders accepted by Group companies are backed by credit insurance.
ii)
Some orders are accepted with no credit insurance but with letters of credit.
iii)
Some orders are accepted with no credit insurance and no letter of credit but with an internal analysis of the
customer’s size, creditworthiness, historic profitability and payment record.
iv)
A few orders (less than 10%), with a material value, are taken at risk following review by at least two Board
members.
v)
Major orders are normally accompanied by stage payments which go towards mitigating our credit risk.
81
NOTES TO THE FINANCIAL STATEMENTS
28. Financial risk management (continued)
a)
Credit risk (continued)
Whilst the theoretical credit risk would be the actual balances themselves as reported within the table below, this
assumes that the credit insurance company is also a credit risk for the invoiced trade debtors and contract assets
underwritten by them. Our insurer enjoys a strong credit rating with the likes of
Moody’s, S&P and Fitch. As a result, and after having looked back on the Group’s track record of negligible
impairment losses on these type of assets over the last 10 years, the Directors are of the opinion that there is no cost /
benefit in performing an ECL type loss analysis and so impairment provisions are based on known issues rather than
a statistical estimate.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure
to credit risk at the reporting date was:
Carrying amount
Notes
2023
2022
£’000
£’000
Contract assets………
…
…
…
…
…
4
16,257
12,331
Trade and other financial assets – due within one year
…
…
18
29,757
23,717
Trade and other financial assets – due after more than one year
18
-
1,191
Cash at bank and cash equivalents
…
…
…
…
…
20
19,661
11,651
Derivative financial assets – due after more than one year
…
16
5,932
2,741
Derivative financial assets – due within one year …
…
…
19
2,684
1,211
At the reporting date, the maximum exposure to credit risk for trade receivables, before taking into account credit
insurance, by geographic region was:
UK…
…
…
…
…
…
…
…
…
…
…
…
7,663
3,603
Rest of Europe
…
…
…
…
…
…
…
…
…
…
4,799
4,053
USA …
…
…
…
…
…
…
…
…
…
…
…
3,267
1,506
Pacific Basin
…
…
…
…
…
…
…
…
…
…
6,315
5,080
Rest of World
…
…
…
…
…
…
…
…
…
…
6,050
9,478
28,094
23,720
The ageing of trade receivables and impairments at the reporting date was:
2023
Impairment
2022
Impairment
Net
Gross
Net
Gross
provision
provision
£’000
£’000
£’000
£’000
£’000
£’000
Not past due …
…
…
18,666
18,666
13,933
13,979
(46)
Past due 1-30 days …
…
4,940
4,942
(2)
4,880
4,962
(82)
Past due 31-90 days…
…
2,409
2,440
(31)
2,330
2,613
(283)
Past due more than 90 days
2,079
2,288
(209)
2,577
2,866
(289)
28,094
28,336
(242)
23,720
24,420
(700)
Management believes that there are no significant credit risks remaining with the above net receivables and that the
credit quality of customers is good, based on a review of past payment history and the current financial status of the
customers. Included in trade receivables are retentions which are job specific and have varying due dates depending
on the complexity of the job. These are included in the not past due category. The Group has not renegotiated the
terms of any trade receivables and has not pledged any trade receivables as security.
The Directors estimate that the fair value of the Group’s trade and other receivables is approximate to their carrying
values.
An analysis of the provision for impairment of receivables is as follows:
2023
2022
£’000
£’000
Opening balance at 1st May
…
…
…
…
…
…
…
…
700
548
Increase in provision
…
…
…
…
…
…
…
…
…
74
470
Release of provision
…
…
…
…
…
…
…
…
…
(362)
(342)
Provision utilised during the year
…
…
…
…
…
…
…
(164)
-
Exchange adjustment
…
…
…
…
…
…
…
…
…
(6)
24
Closing balance at 30th April …
…
…
…
…
…
…
…
242
700
82
NOTES TO THE FINANCIAL STATEMENTS
28.
Financial risk management (continued)
b)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.
At the year end the Group had the following unutilised bank facilities in respect of which all conditions
precedent had been met:
2023
2022
Uncommitted
Committed
Total
Uncommitted
Committed
Total
£’000
£’000
£’000
£’000
£’000
£’000
Unutilised bank
facilities
6,050
33,500
39,550
6,050
16,500
22,550
The Group’s principal borrowing facilities are provided by three banks in the form of borrowings and short-term
overdraft facilities. The quantum of borrowing facilities available to the Group is reviewed regularly in light of current
working capital requirements and the need for capital investment for the long-term future for the Group.
Maturity analysis
The table below analyses the Group’s financial non-derivative liabilities into maturity groupings based on the period
outstanding at the balance sheet date up to the contractual maturity date. All figures are contracted gross cash flows
that have not been discounted.
Contractual cash flows
Carrying
Within
value
1 year
2-3 years
4-5 years
5+ years
Total
Total
Non-derivative financial liabilities
£’000
£’000
£’000
£’000
£’000
£’000
Bank loans - repayable
by instalments
…
…
…
1,234
2,441
1,993
4,985
10,653
9,064
Bank loans - rolling
credit facilities
…
…
…
-
9,000
19,000
-
28,000
28,000
Other loans…
…
…
…
202
-
-
-
202
202
Lease liabilities
…
…
…
1,684
2,673
1,464
362
6,183
5,874
Trade and other
financial liabilities
…
…
…
23,004
-
-
-
23,004
23,004
At 30th April, 2022
…
…
26,124
14,114
22,457
5,347
68,042
66,144
Bank loans - repayable
by instalments
…
…
…
1,514
2,739
1,449
5,347
11,049
8,139
Bank loans - rolling
credit facilities
…
…
…
3,500
27,000
9,000
-
39,500
39,500
Lease liabilities
…
…
…
2,231
3,160
1,182
268
6,841
6,227
Trade and other
financial liabilities
…
…
…
25,164
-
-
-
25,164
25,164
At 30th April, 2023
…
…
32,409
32,899
11,631
5,615
82,554
79,030
The interest rates chargeable on these loans are on a floating basis against SONIA and UK base rate, with bank
margins of less than 2.1%. With effect from 1st September, 2021, the Group entered into a ten year derivative with
HSBC to fix its variable interest rate at less than 1% against a notional £30 million of debt.
There is one bank loan of £1.3 million repayable by instalments, with the final payment due in the year ended 30th
April, 2039. Interest is charged at an effective interest rate of 1.96% (2022: 1.96%), which is fixed for the whole
period.
A second bank loan of £4.5 million is repayable by instalments, with the final payment due in the year
ended 30th April, 2042. The effective interest rate is 6.21% (2022: 2.55%), which will vary over the loan period.
83
NOTES TO THE FINANCIAL STATEMENTS
28.
Financial risk management (continued)
c)
Market risk
Foreign exchange risk
The Group is subject to fluctuations in exchange rates on its net investments overseas and transactional monetary
assets and liabilities not denominated in the operating (or “functional”) currency of the operating unit involved.
The Group is exposed to fluctuations in several currencies which give rise to the net currency gains and losses
recognised in the statement of profit or loss.
The Group at its discretion is empowered to hedge its estimated annual foreign currency exposure in respect of
forecast sales and purchases if the Board deems it appropriate after having taken into account the expected
movement in the foreign exchange rates. The Group uses forward exchange contracts to hedge its foreign currency
risk. The foreign exchange contracts have maturities within three years after the balance sheet date. Where
necessary, the forward exchange contracts are rolled over at maturity.
In respect of other monetary assets and liabilities held in currencies, the Group ensures that the net exposure is
eliminated through the use of forward exchange contracts or spot transactions at the time the contractual
commitment is in place.
Currency profile of financial assets and liabilities:
The table below does not include the exposure from hedging positions. The foreign currency balances have been
translated into Sterling using the reporting date spot rates below.
US
2023
US
2022
Dollar
Euro
Other
Total
Dollar
Euro
Other
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Trade and other
6,193
2,242
51
8,486
receivables
7,615
2,807
77
10,499
Cash and cash
1,388
14
74
1,476
equivalents
1,195
3,508
350
5,053
Trade and other
(1,121)
(965)
(24)
(2,110)
payables
(823)
(808)
(72)
(1,703)
7,987
5,507
355
13,849
6,460
1,291
101
7,852
The following significant exchange rates applied during the year, for reporting purposes;
2023
2022
Average
Reporting
Average
Reporting
exchange ratedate spot rate
exchange rate
spot rate
US Dollar
…
…
…
…
…
1.2016
1.2566
1.3591
1.2570
Euro…
…
…
…
…
…
1.1520
1.1390
1.1791
1.1920
84
NOTES TO THE FINANCIAL STATEMENTS
28.
Financial risk management (continued)
c)
Market risk (continued)
Interest rate risk
The Group is subject to fluctuations in interest rates on its borrowings and surplus cash. The Group is aware of the
financial products available to hedge against adverse movements in interest rates. Formal reviews are undertaken to
determine whether such instruments are appropriate for the Group. As reported elsewhere in these financial
statements, the Company on 2nd July, 2021 signed a contract to mitigate the impact of interest rate risk by taking out
an interest rate swap derivative fixing £30 million of notional debt at less than 1% versus the variable inter-bank
lending rate (SONIA) for a period of ten years, commencing 1st September, 2021.
The table below shows the Group’s financial assets and liabilities split by those bearing fixed and floating rates
and those that are non interest-bearing.
2023
2022
Non-
Non-
Fixed
Floating
interest-
Fixed
Floating
interest-
rate
rate
bearing
Total
rate
rate
bearing
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Cash and cash
-
equivalents
-
19,661
19,661
-
11,651
-
11,651
Contract assets
-
-
16,257
16,257
-
-
12,331
12,331
Trade and financial
assets
-
-
29,757
29,757
-
-
24,908
24,908
Derivative assets
-
-
8,616
8,616
-
-
3,952
3,952
Contract liabilities*
-
-
(32,747)
(32,747)
-
-
(14,749)
(14,749)
Trade and other
financial liabilities
-
-
(25,164)
(25,164)
-
-
(23,004)
(23,004)
Derivative liabilities
-
-
(2,383)
(2,383)
-
-
(4,036)
(4,036)
Bank overdrafts
-
(119)
-
(119)
-
-
-
-
Bank loans -
repayable by
-
instalments
(3,920)
(4,219)
(8,139)
(4,564)
(4,500)
-
(9,064)
Bank loans -
rolling credit
-
facilities
-
(39,500)
(39,500)
-
(28,000)
-
(28,000)
Other loans
-
-
-
-
(202)
-
-
(202)
Lease liabilities
(1,880)
(4,347)
(6,227)
(2,280)
(3,594)
-
(5,874)
(5,800)
(28,524)
(5,664)
(39,988)
(7,046)
(24,443)
(598)
(32,087)
*The majority of contract liabilities are advance payments from customers.
85
NOTES TO THE FINANCIAL STATEMENTS
28.
Financial risk management (continued)
d)
Capital management
The Group’s main objective when managing capital is to safeguard the Group’s ability to continue as a going concern
in order to provide returns to shareholders. The Board maintains a strong capital base so as to maintain investor,
creditor and market confidence and to sustain future development of the business. Operations are funded through
various shareholders’ funds, bank debt, leases and, where appropriate, deferred consideration on acquisitions. The
capital structure of the Group reflects the judgement of the Board as to the appropriate balance of funding required.
At 30th April, 2023, the capital used was £157.6 million, (2022: £145.1 million) as shown in the following table:
2023
2022
£’000
£’000
Cash and cash equivalents
…
…
…
…
…
…
…
…
…
(19,661)
(11,651)
Other loans…
…
…
…
…
…
…
…
…
…
…
-
202
Total lease liabilities
…
…
…
…
…
…
…
…
…
…
6,227
5,874
Bank overdrafts …
…
…
…
…
…
…
…
…
…
…
119
-
Bank loans - repayable by instalments
…
…
…
…
…
…
…
8,139
9,064
Bank loans - rolling credit facilities…
…
…
…
…
…
…
…
39,500
28,000
Net debt in accordance with IFRS 16
…
…
…
…
…
…
…
34,324
31,489
Operating lease debt (former IAS 17 definition)…
…
…
…
…
…
(1,502)
(1,704)
Relevant net debt for KPI purposes…
…
…
…
…
…
…
…
32,822
29,785
Total equity attributable to equity holders of the parent
…
…
…
…
124,747
115,310
Capital
157,569
145,095
The Group aims to maintain a strong credit rating and headroom whilst optimising return to shareholders through an
appropriate balance of debt and equity funding. The Group's general strategy is to keep the debt to equity ratio below
30%, adjusted where appropriate for the effect of acquisitions. At 30th April, 2023 net debt was £32.8 million (2022:
£29.8 million). The gearing ratio is 26.3% (2022: 25.8%).
The Group manages its capital structure and makes adjustments to it with regard to the risks inherent in the business
and in light of changes to economic conditions.
Working capital is managed in order to generate maximum conversion of profits into cash and cash equivalents.
Dividends are based on current year profits, thereby maintaining equity.
The policy for debt is to ensure a smooth debt maturity profile with the objective of ensuring continuity of funding. The
repayment profile for the debt is shown in note 28 (b).
There were no changes in the Group’s approach to capital management during the year.
Currency derivatives
The Group utilises currency derivatives to hedge future transactions and cash flows. The Group is party to a variety
of foreign currency forward contracts in the management of its exchange rate exposures. Foreign currency forward
contracts are denominated in the same currency as the highly probable future sales and the hedged ratio is 1:1.
Forecast transactions
The Group classifies its forward exchange contracts hedging forecast transactions as cash flow hedges and states
them at fair value.
Recognised assets and liabilities
Changes in the fair value of forward exchange contracts that economically hedge monetary assets and liabilities in
foreign currencies and for which no hedge accounting is applied are recognised in the statement of profit or loss.
Both the changes in fair value of the forward contracts and the foreign exchange gains and losses relating to the
monetary items are recognised as part of cost of sales.
Interest rate swaps
The Group utilises interest rate swap derivatives to hedge against future movements in floating interest rates against
the Group's floating rate debt. Hedge accounting is not applied for these instruments and all movements in fair value
are recognised in profit or loss. The prior year analysis of the unhedged and hedged assets due within one year has
been amended.
86
NOTES TO THE FINANCIAL STATEMENTS
28.
Financial risk management (continued)
d)
Capital management (continued)
Interest rate swaps (continued)
Expected cash flow
Within
2-3
4-5
5+
Carrying
Nominal
1 year
years
years
years
Total
value
Value
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Interest rate swap
Assets
274
858
590
1,018
2,740
2,740
30,000
Forward exchange
contracts
Not designated
in cash flow
relationship
Assets
365
-
-
-
365
365
2,668
Liabilities
(249)
-
-
-
(249)
(249)
12,132
116
-
-
-
116
116
14,800
Designated
in cash flow
relationship
Assets
572
275
-
-
847
847
8,012
Liabilities
(2,144)
(1,643)
-
-
(3,787)
(3,787)
48,475
(1,572)
(1,368)
-
-
(2,940)
(2,940)
56,487
Total as at
30th April, 2022
(1,182)
(510)
590
1,018
(84)
(84)
101,287
Interest rate swap
Assets
1,127
1,707
1,312
1,783
5,929
5,929
30,000
Forward exchange
contracts
Not designated
in cash flow
relationship
Assets
128
-
-
-
128
128
8,044
Liabilities
(610)
-
-
-
(610)
(610)
5,369
(482)
-
-
-
(482)
(482)
13,413
Designated
in cash flow
relationship
Assets
1,429
997
133
-
2,559
2,559
107,031
Liabilities
(1,773)
-
-
-
(1,773)
(1,773)
35,644
(344)
997
133
-
786
786
142,675
Total as at
30th April, 2023
301
2,704
1,445
1,783
6,233
6,233
186,088
87
NOTES TO THE FINANCIAL STATEMENTS
28.
Financial risk management (continued)
d)
Capital management (continued)
Cash flow hedging reserve and cost of hedging reserve
2022
2021
£’000
£’000
Change in value used to calculated hedge ineffectiveness
…
…
…
…
(4,077)
(3,037)
Net value of derivatives designated in cash flow relationship
…
…
…
…
786
(2,940)
Matured derivative contracts
…
…
…
…
…
…
…
…
…
(72)
(423)
Deferred tax balance recognised in equity
…
…
…
…
…
…
…
(196)
723
518
(2,640)
Cash flow hedge reserve …
…
…
…
…
…
…
…
…
…
1,492
(2,788)
Cost of hedging reserve …
…
…
…
…
…
…
…
…
…
(974)
148
518
(2,640)
Non-controlling interests
Cash flow hedge reserve
Attributable to equity holders of the parent …
…
…
…
…
…
…
1,504
(2,746)
Attributable to non-controlling interests
…
…
…
…
…
…
…
(12)
(42)
1,492
(2,788)
Cost of hedging reserve
Attributable to equity holders of the parent …
…
…
…
…
…
…
(976)
140
Attributable to non-controlling interests
…
…
…
…
…
…
…
2
8
(974)
148
The matured derivative contracts carried forward as part of the hedge reserve are those where the hedge was still
effective at maturity but the underlying transactions had not occurred.
Sensitivity analysis
The Group has calculated the following sensitivities based on available data from forward contract markets for the
principal foreign currencies in which the Group operates. As foreign exchange rates and interest rates continue to
fluctuate significantly, the Board considers it most appropriate to provide the sensitivities for a 1% change, because
these figures can be extrapolated proportionately to obtain an estimate of the impact of large movements. The
Group’s exposure to foreign currency changes for all other foreign currencies is not considered material.
Year ended 30th April, 2023
Year ended 30th April, 2022
(Profit) / loss
(Profit) / loss
(Profit) / loss
impact on
(Profit) / loss
impact on
impact on
statement of
impact on
statement of
equity
profit or loss
equity
profit or loss
£’000
£’000
£’000
£’000
1% increase in US Dollar fx rate
against pound Sterling
…
…
(845)
(428)
(597)
(207)
1% increase in Euro fx rate
against pound Sterling
…
…
(67)
(53)
(37)
68
1% decrease in US Dollar fx rate
against pound Sterling
…
…
845
428
597
207
1% decrease in Euro fx rate
against pound Sterling
…
…
67
53
37
(68)
1% increase in interest rates …
…
-
200
-
-
88
NOTES TO THE FINANCIAL STATEMENTS
28. Financial risk management (continued)
e)
Total financial assets and liabilities
The table below sets out the Group’s accounting classification of each class of financial assets and liabilities and
their fair values at 30th April, 2023 and 30th April, 2022.
Year ended 30th April, 2023
Year ended 30th April, 2022
Carrying
Carrying
Fair value
amount
Fair value
amount
Financial assets
£’000
£’000
£’000
£’000
At amortised cost
Cash and cash equivalents
…
…
…
19,661
19,661
11,651
11,651
Contract assets
…
…
…
…
…
16,257
16,257
12,331
12,331
Trade receivables …
…
…
…
…
28,094
28,094
23,720
23,720
Other financial assets
…
…
…
…
1,663
1,663
1,188
1,188
At fair value through profit and loss
Derivative financial assets not designated in
a cash flow hedge relationship
…
…
128
128
365
365
Interest rate swap
…
…
…
…
5,929
5,929
2,740
2,740
Fair value – hedging instrument
Derivative financial assets designated and
effective as cash flow hedging instruments
2,559
2,559
847
847
Total financial assets
…
…
…
74,291
74,291
52,842
52,842
Financial liabilities at amortised cost
Contract liabilities
…
…
…
…
32,747
32,747
14,749
14,749
Trade payables
…
…
…
…
…
22,400
22,400
18,958
18,958
Other financial liabilities
…
…
…
2,764
2,764
4,046
4,046
Lease liabilities
…
…
…
…
…
6,227
6,227
5,874
5,874
Bank overdrafts
…
…
…
…
…
119
119
-
-
Bank loans - repayable by instalments
…
8,139
8,139
9,064
9,064
Bank loans - rolling credit facilities
…
…
39,500
39,500
28,000
28,000
Other loans
…
…
…
…
…
-
-
202
202
At fair value through the profit and loss
Derivative financial liabilities not designated in
a cash flow hedge relationship
…
…
610
610
247
247
Fair value – hedging instrument
Derivative financial liabilities designated and
effective as cash flow hedging instruments
1,773
1,773
3,787
3,787
Total financial liabilities
…
…
…
114,279
114,279
84,927
84,927
The analysis between hedged and unhedged derivative assets in the previous year has been amended.
Derivative financial assets and liabilities fair values in the above table are derived using Level 2 inputs as defined by
IFRS 7 as detailed in the paragraph below.
IFRS 7 requires that the classification of financial instruments at fair value be determined by reference to the source
of inputs used to derive the fair value. This classification uses the following three-level
hierarchy: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs
other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); Level 3 - inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The Group does not use derivatives for speculative purposes. All transactions in derivative financial instruments are
underpinned by firm orders from customers or to suppliers or where there is a high degree of probability that orders
will be received.
For short-term cash and cash equivalents, trade and other receivables, contract assets, trade and other financial
liabilities, contract liabilities, fixed and floating rate borrowings, the fair values are the same as carrying value.
89
NOTES TO THE FINANCIAL STATEMENTS
29.
Capital commitments
Contracted capital commitments at 30th April, 2023 for which no provision has been made in these financial
statements were £4,576,000 (2022: £8,393,000).
30.
Guarantees and contingencies
The table below sets out the number and value of unexpired bank guarantee bonds as at 30th April, 2023 and 30th April,
2022. These guarantee bonds are required as part of the terms and conditions within our Mechanical Engineering
contracts.
2023
2022
£’000
£’000
146 guarantee and bonds contracts (2022: 148)
…
…
…
…
…
9,180
6,586
31.
Subsequent events
After the balance sheet date an ordinary dividend of 115p per qualifying ordinary share was proposed by the Directors
(2022: Ordinary dividend of 107.80p).
The current year proposed ordinary dividend of £8,636,000 has not been provided for within these financial statements
(2022: Proposed ordinary dividend of £8,289,000 was not provided for within the comparative figures).
The company announced on 5th May, 2023 that it was proceeding with a Tender offer to tender up to 180,000 of its
ordinary shares at the tender price of £48 per ordinary share. The tender offer was subsequently approved at a General
Meeting that was held on 30th May, 2023 and the following day the offer ended. The offer was oversubscribed by 229%
and, of the total number of Ordinary Shares validly tendered, all 180,000 Ordinary Shares have been purchased by the
Company and on 7th June, 2023 were cancelled off the register. The total cost of Ordinary Shares purchased was £8.64
million. The resulting number of shares as at the signing date is 7,509,600.
32.
Non-principal subsidiaries and associates
Company name
Registered
Country of
Class of
Non-principal Subsidiaries:
address*
Incorporation
shares held
% held
Mechanical Engineering:
Easat Radar Systems India Private Limited
…
…
4
India
Ordinary
100
Goodwin Submersible Pumps West Africa Limited
…
18
Ghana
Ordinary
100
Refractory Engineering:
Gold Star Brazil Limited
…
…
…
…
…
8
Brazil
Ordinary
100
Gold Star Powders Private Limited …
…
…
…
4
India
Ordinary
100
Jewelry Wax Limited
…
…
…
…
…
…
14
Thailand
Ordinary
75
GRS Silicone Company Limited
…
…
…
…
17
China
Ordinary
75
Shenzhen King-Top Modern Hi-Tech Company Limited
16
China
Ordinary
75
Non-principal holding companies:
Goodwin Refractory Services Holdings Limited …
…
1
England and Wales
Ordinary
100
Ying Tai (UK) Limited
…
…
…
…
…
…
1
England and Wales
Ordinary
75
Non-principal Associates:
Tet Goodwin Property Company Limited …
…
…
11
Thailand
Ordinary
49
Dormant companies:
Gold Star Powders Limited
…
…
…
…
…
1
England and Wales
Ordinary
100
Net Central Limited
…
…
…
…
…
…
1
England and Wales
Ordinary
100
Sandersfire International Limited
…
…
…
…
1
England and Wales
Ordinary
100
Soluform Limited
…
…
…
…
…
…
1
England and Wales
Ordinary
100
Specialist Refractory Services Limited
…
…
…
1
England and Wales
Ordinary
100
*The registered address for each company can be found in note 34.
All of the above companies are included as part of the consolidated accounts. The trading companies are all involved in
mechanical or refractory engineering.
33.
Related parties
Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not
reported in this note. Year end balances and transactions during the year with the Group’s associate company, Tet
Goodwin Property Company Limited, are shown below.
2023
2022
£’000
£’000
Rental cost……………………………
318
301
90
NOTES TO THE FINANCIAL STATEMENTS
34.
Registered offices of subsidiaries and associates
The registered offices of the companies listed in notes 13 and 32 are listed below.
1.
Ivy House Foundry, Hanley, Stoke-on-Trent ST1 3NR
2.
Brassington, Nr. Matlock, Derbyshire DE4 4HF
3.
13-1, Jungbong-daero, 396 Beon-Gil, Seo-gu, Incheon, South Korea
4.
No 39/1-5, Old Mahabalipuram Road, Kalavakkam, Thiruporur Chengalpattu District – 603110, India
5.
Suite C, F1, Building #14, Xiya Road No.11, Waigaoqiao Free Trade Zone, 200131, Shanghai, China
6.
Hocksteiner Weg 56, D - 41189 Mönchengladbach, Germany
7.
Suite 1105, Building 1, Wanguocheng Moma, No.16 Changfeng West Street, Wanbailin District, Taiyuan,
Shanxi Province, 30021, China
8.
Rua das Margaridas s/n, No. 70, Barrio Terra Preta - Mairipora – SP, CEP 07662-025, São Paulo, Brazil
9.
Confidential Tax and Business Services, Level 1, 449 Gympie Road, Kedron Qld 4031, Australia
10.
Koivupuistontie 34, 01510 Vantaa, Finland
11.
99/9 Moo5 Khlong Yong, Bhudhamontol, Nakhonpathom, 73170 Thailand
12.
No.73, Jiao Xin Road, Lanhe Town, Nansha District, Guangzhou City, 511480, China
13.
400 metres North from Nan Zhai Committee, Xifuzhen Street, Chengyang District, Qingdao City, 266106,
China
14.
238, 3rd Floor, OPG Tech Building Bangkhuntien-Chatalay, Samaedum Sub-district, Bangkhuntien District,
Bangkok 10150, Thailand
15.
Unit 1 Bridgeway Business Park, Cnr Sam Green Road and Pinnacle Close, Tunney Extension 9, Germiston,
Gauteng, 1401, South Africa
16.
No.2-1, Shanzixia Road, Dakang Community, Yuanshan Street, Longgang District, Shenzhen City,
Guangdong Province, China
17.
165 Minsheng Road, Lanhe Town, Nansha District, Guangzhou, China
18.
11, NII Ablade Kotey Avenue, East Legon, Accra, Ghana
35.
Share-based payment transactions
The Group had one share option scheme, the LTIP, the terms of which are outlined in the Directors’ Remuneration
Policy and Report on page 37. The scheme has now ended.
Grant date/
Method of
Maximum
Vesting
Contractual life
employees
settlement
number of
conditions
of options
entitled
instruments
Options granted on
Equity
576,000
For every 10%
Expiry date:
5th October, 2016
growth in TSR
30th April, 2019
to Executive
28,800 shares
Directors
will vest
Awards entitle each holder to earn up to 1% of the share capital of the Company subject to the performance condition.
An award vested and became exercisable over 0.05% of the share capital of the Company for every 10% increase in the
TSR of the Company at the end of the three financial years ending on 30th April, 2019 with a base year of 2009 but
excluding the growth already achieved up to 30th April, 2016.
Number of share options
2023
2022
Vested 1st May, 2019
…
…
…
…
…
…
…
…
-
489,600
Outstanding at beginning of year
…
…
…
…
…
…
…
…
-
163,200
Exercised during the year
…
…
…
…
…
…
…
…
-
163,200
Exerciseable at end of year
…
…
…
…
…
…
…
…
-
-
£
£
Share price at the date of exercise
…
…
…
…
…
…
…
…
-
30.70
91
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY BALANCE SHEET
at 30th April, 2023
2023
2022
NON-CURRENT ASSETS
Notes
£’000
£’000
Property, plant and equipment …
…
…
…
…
…
C4
42,946
33,696
Investment properties
…
…
…
…
…
…
…
C4
30,547
26,805
Right-of-use assets …
…
…
…
…
…
…
…
C4
4,817
4,085
Investments …
…
…
…
…
…
…
…
…
C5
25,822
25,822
Intangible assets
…
…
…
…
…
…
…
…
C6
16,108
15,681
Derivative financial assets
…
…
…
…
…
…
28, C7
4,802
2,466
Group receivables …
…
…
…
…
…
…
…
C8
31,756
30,177
156,798
138,732
CURRENT ASSETS
Other receivables
…
…
…
…
…
…
…
…
C8
938
1,178
Derivative financial assets
…
…
…
…
…
…
28, C7
1,127
274
Cash at bank and in hand
…
…
…
…
…
…
12,962
851
15,027
2,303
TOTAL ASSETS
…
…
…
…
…
…
…
…
171,825
141,035
CURRENT LIABILITIES
Borrowings …
…
…
…
…
…
…
…
…
C9
6,053
2,086
Other payables
…
…
…
…
…
…
…
…
C10
19,743
6,446
25,796
8,532
NON-CURRENT LIABILITIES
Borrowings …
…
…
…
…
…
…
…
…
C9
45,074
38,053
Deferred income
…
…
…
…
…
…
…
…
780
803
Deferred tax liabilities
…
…
…
…
…
…
…
C11
8,300
5,052
54,154
43,908
TOTAL LIABILITIES
…
…
…
…
…
…
…
…
79,950
52,440
NET ASSETS…
…
…
…
…
…
…
…
…
91,875
88,595
EQUITY
Called up share capital
…
…
…
…
…
…
…
C12
769
769
Share-based payments reserve
…
…
…
…
…
5,244
5,244
Profit and loss account
…
…
…
…
…
…
…
85,862
82,582
TOTAL EQUITY
…
…
…
…
…
…
…
…
91,875
88,595
Profit after tax for the year
…
…
…
…
…
…
…
11,569
12,443
The comparative figures have been amended to report the Group receivable balances as non-current assets.
These financial statements were approved by the Board of Directors on 7th August, 2023 and signed on its behalf by:
T. J. W. Goodwin M. S. Goodwin Director Director
S. R. Goodwin
Director
Company Registration Number: 305907
The notes on pages 94 to 103 form part of these financial statements.
92
NOTES TO THE FINANCIAL STATEMENTS
GOODWIN PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30th April, 2023
Share-
based
Share
payments
Retained
Total
capital
reserve
earnings
equity
£’000
£’000
£’000
£’000
YEAR ENDED 30TH APRIL, 2023
Balance at 1st May, 2022
…
…
…
…
769
5,244
82,582
88,595
Total comprehensive income:
Profit for the year
…
…
…
…
…
-
-
11,569
11,569
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
-
-
11,569
11,569
Dividends paid
…
…
…
…
…
…
-
-
(8,289)
(8,289)
BALANCE AT 30TH APRIL, 2023
769
5,244
85,862
91,875
YEAR ENDED 30TH APRIL, 2022
Balance at 1st May, 2021
…
…
…
…
753
5,244
78,001
83,998
Total comprehensive income:
Profit for the year
…
…
…
…
…
-
-
12,443
12,443
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
-
-
12,443
12,443
Issue of shares
…
…
…
…
…
…
16
-
-
16
Dividends paid
…
…
…
…
…
…
-
-
(7,862)
(7,862)
BALANCE AT 30TH APRIL, 2022
769
5,244
82,582
88,595
93
NOTES TO THE FINANCIAL STATEMENTS
C1
Accounting policies
Principal accounting policies
These financial statements present information about the Company as an individual undertaking and not about its
Group. These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (“FRS 101”).
Basis of accounting
Goodwin PLC (the “Company”) is a Company incorporated and domiciled in England and Wales.
These financial statements have been prepared in accordance with International Accounting Standards as adopted
by the UK and in conformity with the requirements of the Companies Act 2006.
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial
statements. The accounting policies set out below have, unless otherwise stated, been applied consistently to all
periods presented in these financial statements.
The Company is exempt under S408 (3) Companies Act 2006 from the requirement to present its own profit and loss
account.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the
following disclosures:
•
A cash flow statement and related notes;
•
Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
•
Disclosures in respect of transactions with wholly-owned subsidiaries;
•
Disclosures in respect of capital management and
•
The effects of new but not yet effective IFRSs.
As the consolidated financial statements of Goodwin PLC include the equivalent disclosures, the Company has also
taken the exemptions under FRS 101 available in respect of certain disclosures required by IFRS 13 Fair Value
Measurement and the disclosures required by IFRS 7 Financial Instrument Disclosures.
Judgements made by the Directors, in the application of these accounting policies, that have significant effect on the
financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note
2 of the Group financial statements.
Measurement convention
The financial statements have been prepared under the historical cost accounting rules except where the
measurement of balances at fair value is required as below.
Investments in subsidiary undertakings
In the Company’s financial statements, investments in subsidiary undertakings are stated at cost less amounts
written off for impairment.
Foreign currency
Transactions in foreign currencies are translated to the respective functional currencies at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance
sheet date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on
translation are recognised in the statement of profit or loss within operating profit.
Financial instruments
Financial assets and financial liabilities are recognised on the Company’s balance sheet when the Company has
become a party to the contractual provisions of the instrument. The principal financial assets and liabilities of the
Company are as follows:
Principal non-derivative financial assets
Other receivables
Other receivables principally comprise short-term tax balances and receivables from Group undertakings. After
being recognised initially at fair value, other receivables are measured, subsequently, at amortised cost. The
carrying amount of other receivables is considered to be a reasonable approximation of their fair value. A provision
for expected credit losses (ECL) is not seen as necessary given that the counterparties here are Group
undertakings. The Company is privy to both the accounts and future prospects of its subsidiary and associate
companies. Accordingly, impairment provisions are raised where the carrying value of a subsidiary company /
associated company cannot be fully supported.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand including cash deposits with an original maturity of
three months or less.
Equity instruments
Equity instruments are stated at par value, with the par value of ordinary shares being reported as share capital.
94
NOTES TO THE FINANCIAL STATEMENTS
C1
Accounting policies (continued)
Principal non-derivative financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements into which the
Company has entered.
Bank borrowings
Interest-bearing
bank
loans
and
overdrafts
are
recorded
initially
at
their
fair
value
less
attributable
transaction costs. They are subsequently carried at their amortised cost and finance charges are recognised in the
statement of profit or loss over the term of the instrument using an effective rate of interest.
Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently at amortised cost using the
effective interest method where material.
Intangible fixed assets and amortisation
Manufacturing rights, brand names and customer lists purchased by the Company are amortised to nil by equal
annual instalments over their estimated useful lives. Expenditure on development activities is capitalised if the
product or process is technically and commercially feasible and the Company has sufficient resources to complete
development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion
of overheads.
Amortisation rates are as follows:
Manufacturing rights …
…
…
…
…
11 - 15 years
Brand names……
…
…
…
…
20 years
Software and licences
…
…
…
…
3 - 5 years
Intellectual property rights …
…
…
…
15 - 20 years
Non-compete agreements …
…
…
…
2 - 15 years
Capitalised development costs
…
…
…Minimum expected order unit intake or
minimum product life
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items of property, plant and equipment.
Depreciation is charged to the statement of profit or loss over the estimated useful lives of each part of an item of
property, plant and equipment on the following bases:
Freehold land
…
…
…
…
…
…Nil
Freehold buildings
…
…
…
…
…2% to 4% on reducing balance or cost
Plant and machinery …
…
…
…
…5% to 25% on reducing balance or cost
Motor vehicles …
…
…
…
…
…15% or 25% on reducing balance
Tooling
…
…
…
…
…
…over estimated production life
Other equipment
…
…
…
…
…15% to 25% on reducing balance
Assets in the course of construction are not depreciated.
Before being brought into use, assets are assessed individually to determine which is the most appropriate
depreciation method. At present, most assets are being depreciated on a reducing balance basis.
Investment properties
Investment properties are properties which are held either to earn rental income or for capital appreciation or for both.
Investment properties are stated at cost less accumulated depreciation.
Depreciation is charged to the statement of profit or loss on a straight-line basis or reducing balance basis over the
estimated useful lives of investment properties which is typically 25 years.
Government grants
Government grants relating to income are recognised in the statement of profit or loss.
Unamortised government grants relating to property, plant and equipment are recognised in the balance sheet as
deferred income. Amortisation of such grants is credited to profit and loss in accordance with the useful lives of the
assets to which they relate.
Provisions
A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If
the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and, where appropriate, the risks specific to the
liability.
Leases
Definition of a lease
A contract is a lease or contains a lease if it transfers the right to use an identified asset over the contract term, in
exchange for payment. In determining whether a contract gives the Company the right to use an asset, the Company
assesses whether:
95
NOTES TO THE FINANCIAL STATEMENTS
C1
Accounting policies (continued)
Leases (continued)
Definition of a lease (continued)
•
the contract involves the use of an identified asset;
•
the Company has the right to obtain substantially all of the economic benefit of using the asset; and
•
the Company has the right to direct the use of the asset by deciding how the asset is employed.
Lease term
The lease term is the non-cancellable period of a lease, and options to extend the lease or terminate it, where it is
probable that the Company will exercise the available options. At the start of a lease, the Company makes a
judgement about whether it is reasonably certain to exercise the options, and reassesses this judgement at every
reporting period. Contracts, where the original lease term has expired, with assets continuing to be leased on a short-
term rolling basis of a few months, are treated as short-term leases.
Lease balances
A right-of-use asset and a lease liability are calculated at the beginning of a lease. The right-of-use asset is measured
initially at cost, being the opening lease liability, adjusted for any lease payments made by the start of the lease,
adjusted for any initial direct costs, which have been incurred.
The lease liability is measured initially at the present value of the lease payments, which are outstanding at the start
date, discounted at either the rate implicit in the lease or the Company’s incremental borrowing rate. With the
exception of leases containing an option to purchase, the Company uses its incremental borrowing rate as the
discount rate. Lease liabilities are measured at amortised cost, using the effective rate, and adjusted as required for
any subsequent change to the lease terms.
The right -of-use asset is depreciated on a straight-line basis over the lease term, or from the start date of the lease to
the end of the useful life of the right-of-use asset as appropriate. The method of calculating the estimated useful lives
of the right-of-use assets and testing for impairment is the same as that for property, plant and equipment.
Recognition exemptions
Payments for short-term leases, lasting twelve months or less, without a purchase option, are reported an as
operating expense on a straight-line basis over the term of the lease.
The cost of leasing low-value items is reported as an operating expense over the life of the lease.
Finance costs (net)
Finance costs comprise interest payable and interest on finance leases using the effective interest method, together
with the amortisation of any facility arrangement fees. Borrowing costs that are directly attributable to the acquisition,
construction or production of an asset, which takes a substantial time to be prepared for use, are capitalised as part of
the cost of that asset.
Interest income and interest payable is recognised in the statement of profit or loss as it accrues.
Pension costs
The Company contributes to a defined contribution pension scheme for employees under an Auto Enrolment Pension
arrangement as required by Government legislation. The assets of the scheme are held in independently
administered funds. Company pension costs are charged to the statement of profit or loss in the year for which
contributions are payable.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the statement of profit or
loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
Share-based payment transactions
Share-based payment arrangements, in which the Company receives goods or services as consideration for its own
equity instruments, are accounted for as equity-settled share-based payment transactions, regardless of how the
equity instruments are obtained by the Company.
The grant date fair value of share-based payment awards granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the period in which the employees become unconditionally
entitled to the awards. The fair value of the awards is measured using an option valuation model, taking into account
the terms and conditions upon which the awards were granted.
96
NOTES TO THE FINANCIAL STATEMENTS
C1
Accounting policies (continued)
Interest swap derivative
The mark to market value of the Company’s interest rate swap derivative is treated as not being hedged with the
movement on the mark to market valuation being taken through the profit and loss account.
C2
Auditor’s remuneration
Included in the profit / (loss) before taxation are the following:
2023
2022
£’000
£’000
Fees receivable by the auditors and the auditor’s associates in respect of:
Audit of these financial statements
…
…
…
…
…
…
…
80
66
Amounts paid to the Company’s auditor in respect of services to the Company, other than the audit of the Company’s
financial statements, have not been disclosed as the information is required instead to be disclosed on a consolidated
basis (see note 5 of the Group financial statements).
C3
Staff numbers and costs
The average number of persons employed by the Company (including Directors) during the year, analysed by
category, was as follows:
Number of employees
2023
2022
Administration staff
…
…
…
…
…
…
…
…
…
…
51
50
2023
2022
£’000
£’000
The aggregate payroll costs of these persons were as follows:
Wages and salaries
…
…
…
…
…
…
…
…
…
…
4,951
4,293
Social security costs
…
…
…
…
…
…
…
…
…
…
616
1,199
Other pension costs
…
…
…
…
…
…
…
…
…
…
99
103
5,666
5,595
Details of the Directors’ remuneration can be found within the Directors’ Remuneration Report on page 35. The
emoluments of the highest paid Director were £406,000 (2022: £ 374,000). The number of Directors who were
members of a defined contribution pension scheme was 3 (2022: 6). The social security costs include £nil million
(2022: £0.7 million) in respect of employer’s national insurance relating to exercised share options under the
Executive Directors’ Equity Long Term Incentive Plan.
97
NOTES TO THE FINANCIAL STATEMENTS
C4Tangible fixed assets
Investment
Property, Plant and Equipment
properties
Other
Assets in
Land and
Plant and
equipment
course of
buildings
machinery
*
construction
Total
£’000
£’000
£’000
£’000
£’000
£’000
Cost
Balance at 1st May, 2022
34,575
5,753
40,857
1,941
6,951
55,502
Additions
…
…
292
2
1,429
76
14,791
16,298
Reclassification …
…
4,511
(4,511)
178
-
(178)
(4,511)
Transfer to - ROU**
…
-
-
-
-
(366)
(366)
Balance at 30th April, 2023
39,378
1,244
42,464
2,017
21,198
66,923
Depreciation
Balance at 1st May, 2022
7,770
702
19,679
1,425
-
21,806
Charged in the year
…
1,061
22
2,030
119
-
2,171
Balance at 30th April, 2023
8,831
724
21,709
1,544
-
23,977
Net book value
At 30th April, 2022
…
26,805
5,051
21,178
516
6,951
33,696
At 30th April, 2023
30,547
520
20,755
473
21,198
42,946
*
Other equipment comprises motor vehicles, IT hardware and office equipment.
**
This is a transfer to the right-of-use assets category, relating to ongoing investment in Green Projects.
Land
with
a
net
book
value
of
£4.5
million
(2022:
£4.5
million)
and
furnaces
with
a
net
book
value
of
£4.8 million (2022: £5.1 million) has been pledged as security for bank loans (refer to note C9).
The Company’s investment properties have been valued, using the cost model, and depreciated over their
estimated useful lives – typically 25 years. In the opinion of the Directors, the fair value of the investment properties
as at 30th April, 2023 was estimated to be £62 million (2022: £51 million) , compared with the net book value of £31
million (2022: £27 million). Fair value for this purpose is based on Level 3 fair value inputs and, specifically, the
Directors’ opinion as to the amount for which the property could be exchanged between knowledgeable, willing
parties in an arm’s length transaction given a reasonable timeframe in which to conclude such an exchange.
Independent valuations have not been performed.
Investment property income and operating expenses
The Company rents investment properties to its UK subsidiaries. There are no formal agreements in place and for
this reason, it is not possible to disclose a maturity analysis of lease payments.
2023
2022
£’000
£’000
Property income …
…
…
…
…
…
…
…
…
…
1,503
1,472
Operating expenses
…
…
…
…
…
…
…
…
…
(819)
(876)
98
NOTES TO THE FINANCIAL STATEMENTS
C4Tangible fixed assets (continued)
Right-of-use assets
Plant and
Other
machinery
equipment
Total
£’000
£’000
£’000
Cost
Balance at 1st May, 2022
…
…
…
…
…
3,215
1,566
4,781
Additions
…
…
…
…
…
…
…
728
198
926
Transfer from property, plant and equipment…
…
366
-
366
Balance at 30th April, 2023
4,309
1,764
6,073
Depreciation
Balance at 1st May, 2022
…
…
…
…
…
215
481
696
Charged in the year …
…
…
…
…
…
162
398
560
Balance at 30th April, 2023
377
879
1,256
Net book value
At 30th April, 2022
…
…
…
…
…
…
3,000
1,085
4,085
At 30th April, 2023
3,932
885
4,817
C5Fixed asset investments
Shares in
Shares in
associated
Group
undertakings
undertakings
Total
£’000
£’000
£’000
Cost
Balance at 1st May, 2022
…
…
…
…
…
237
31,498
31,735
Balance at 30th April, 2023
237
31,498
31,735
Impairment
Balance at 1st May, 2022
…
…
…
…
…
-
5,913
5,913
Balance at 30th April, 2023
-
5,913
5,913
Net book value
At 30th April, 2022
…
…
…
…
…
…
237
25,585
25,822
At 30th April, 2023
237
25,585
25,822
A list of principal subsidiaries and associates is given in note 13 and a list of non-principal subsidiaries and
associates is given in note 32 of the Group financial statements.
99
NOTES TO THE FINANCIAL STATEMENTS
C6Intangible assets
Brand names
and
Manu-
Software
Develop-
intellectual
facturing
and
ment
property
rights
Licences
costs
Total
£’000
£’000
£’000
£’000
£’000
Cost
Balance at 1st May, 2022
…
…
8,043
1,653
495
10,725
20,916
Additions
…
…
…
…
525
19
11
556
1,111
Intercompany transfers
…
…
-
-
-
370
370
Disposals
…
…
…
…
-
-
(96)
(222)
(318)
Balance at 30th April, 2023
8,568
1,672
410
11,429
22,079
Amortisation
Balance at 1st May, 2022
…
…
1,897
1,120
336
1,882
5,235
Amortisation for the year
…
…
354
68
61
571
1,054
Disposals
…
…
…
…
-
-
(96)
(222)
(318)
Balance at 30th April, 2023
2,251
1,188
301
2,231
5,971
Net book value
At 30th April, 2022
…
…
…
6,146
533
159
8,843
15,681
At 30th April, 2023
6,317
484
109
9,198
16,108
C7
Interest rate swap
The Group utilises interest rate swap derivatives to hedge against future movements in floating interest rates against
the Group's floating rate debt. Hedge accounting is not applied for these instruments and all movements in fair value
are recognised in profit or loss. Further details are contained in note 28 of the Group financial statements.
C8Debtors
2023
2022
Due after more than one year
£’000
£’000
Interest-bearing
Amounts owed by Group undertakings – repayable within five years …
…
8,495
7,767
Non interest-bearing
Amounts owed by Group undertakings – repayable within five years …
…
23,261
22,410
31,756
30,177
Due within one year
Other debtors ………
…
…
…
…
…
…
…
…
166
383
Prepayments and accrued income
…
…
…
…
…
…
…
653
695
Corporation tax receivable…
…
…
…
…
…
…
…
…
119
100
938
1,178
Amounts owed by Group undertakings are considered to be repayable within five years, as the Company supports the
working capital requirements of the Group undertakings and repayment is required by the Company only when there
are excess funds within each specific Group undertaking. The comparative figures have been adjusted to correct the
analysis between interest bearing and non-interest bearing balances owed by Group undertakings, and to show all
group receivable balances as being due after more than one year.
100
NOTES TO THE FINANCIAL STATEMENTS
C9
Borrowings
This note provides information about the contractual terms of the Company’s interest-bearing bank loans and
borrowings. For more information about the Group’s exposure to interest rate risk, see note 28 (d) of the Group
financial statements.
2023
2022
Non-
Non-
Current
Total
current
Current
Total
current
liabilities liabilities
borrowings
liabilities
liabilitiesborrowings
£’000
£’000
£’000
£’000
£’000
£’000
Bank overdrafts …
…
…
-
119
119
-
-
-
Bank loans repayable
by instalments
…
…
…
5,906
1,026
6,932
6,988
937
7,925
Bank loans - rolling
credit facilities
…
…
…
36,000
3,500
39,500
28,000
-
28,000
Other loans
…
…
…
-
-
-
-
202
202
Lease liabilities …
…
…
3,168
1,408
4,576
3,065
947
4,012
45,074
6,053
51,127
38,053
2,086
40,139
Lease liabilities
Lease liabilities are payable as follows:
2023
2022
Minimum
Minimum
lease
lease
Interest
Principal
payments
Interest
Principal
payments
£’000
£’000
£’000
£’000
£’000
£’000
Less than one year
…
…
1,644
236
1,408
1,033
86
947
Between two and
three years
…
…
…
2,551
251
2,300
1,954
88
1,866
Between four and
five years
…
…
…
897
29
868
1,218
19
1,199
5,092
516
4,576
4,205
193
4,012
Bank loan repayable by instalments
The loans are secured against three furnaces and land (see note C4). Bank loans are payable as follows:
2023
2022
Minimum
Minimum
loan
loan
Interest
Principal
payments
Interest
Principal
payments
£’000
£’000
£’000
£’000
£’000
£’000
Less than one year
…
…
1,362
336
1,026
1,145
208
937
Between two and
three years
…
…
…
2,527
559
1,968
2,267
330
1,937
Between four and
five years
…
…
…
1,275
431
844
1,824
214
1,610
More than five years
…
…
4,503
1,409
3,094
4,096
655
3,441
9,667
2,735
6,932
9,332
1,407
7,925
C10 Other payables
2023
2022
£’000
£’000
Trade payables
…
…
…
…
…
…
…
…
…
…
852
966
Amounts owed to Group undertakings – interest-bearing …
…
…
…
5,200
4,526
Amounts owed to Group undertakings – non interest-bearing
…
…
…
12,622
14
Other taxation and social security
…
…
…
…
…
…
…
365
335
Other creditors
…
…
…
…
…
…
…
…
…
…
12
245
Accruals and deferred income
…
…
…
…
…
…
…
…
692
360
19,743
6,446
101
NOTES TO THE FINANCIAL STATEMENTS
C11
Provisions for deferred tax
Balance at 1st May, 2022 …
Recognised in profit or loss
Balance at 30th April, 2023
C12
Called up share capital
Property,
plant and
Tax
equipment
losses
Derivatives
Other
Total
£’000
£’000
£’000
£’000
£’000
…
…
6,865
(2,496)
685
(2)
5,052
…
…
1,785
2,146
(685)
2
3,248
8,650
(350)
-
-
8,300
2023
2022
£’000
£’000
Authorised, allotted, called up and fully paid:
Balance at 1st May, 2022, 7,689,600 (2022: 7,526,400 ordinary shares of 10p each)
769
753
Issue of 163,200 ordinary shares of 10p each
…
…
…
…
…
…
-
16
Balance at 30th April
769
769
Details of the share issue are contained in note 35 of the Group financial statements.
C13
Contingent liabilities
The Company is jointly and severally liable for value added tax due by other members of the Group amounting to
£Nil (2022: £Nil).
C14
Related party balances and transactions
The Company has applied the exemptions available under FRS 101 in respect of the disclosure of transactions with
wholly-owned subsidiary companies. The Company has transacted with Easat Radar Systems Limited, Goodwin
Korea Company Limited, Jewelry Plaster Limited, NRPL Aero Oy, Siam Casting Powders Limited, Ultratec Jewelry
Supplies Limited and Ying Tai (UK) Limited which are not wholly-owned subsidiaries.
2023
2022
£’000
£’000
Related party balances
Interest-bearing balances
Amounts owed by Group undertakings – repayable within five years
…
…
7,998
7,767
Non interest-bearing balances
Amounts owed by Group undertakings – repayable within five years
…
…
735
784
Non interest-bearing payable balances
Amounts owed by Group undertakings – repayable on demand
…
…
…
(149)
-
Related party transactions
Dividend income
…
…
…
…
…
…
…
…
773
1,260
Interest income
…
…
…
…
…
…
…
…
237
219
Management fee income
…
…
…
…
…
…
…
…
536
536
Rental income
…
…
…
…
…
…
…
…
141
76
Royalty income
…
…
…
…
…
…
…
…
164
116
Compensation of key management personnel
Key management personnel are defined in the Directors’ Remuneration Report on page 36, and their remuneration
is disclosed on page 36 of the Group financial statements.
C15
Commitments
Contracted capital commitments at 30th April, 2023 for which no provision has been made in these financial
statements were £1,510,000 (2022: £8,393,000).
C16
Subsequent events
After the balance sheet date, ordinary dividends were declared of £8,636,000, which have not been provided for
within these financial statements.
The company announced on 5th May, 2023 that it was proceeding with a Tender offer to tender up to 180,000 of its
ordinary shares at the tender price of £48 per ordinary share. The tender offer was subsequently approved at a
General Meeting that was held on 30th May, 2023 and the following day the offer ended. The offer was
oversubscribed by 229% and, of the total number of Ordinary Shares validly tendered, all 180,000 Ordinary Shares
have been purchased by the Company and on 7th June, 2023 were cancelled off the register. The total cost of
Ordinary Shares purchased was £8.64 million. The resulting number of shares as at the signing date is £7,509,600.
102
NOTES TO THE FINANCIAL STATEMENTS
C17 Dividends
2023
2022
Paid ordinary dividends during the year in respect of prior years
£’000
£’000
107.80p (2022: 102.24p) per qualifying ordinary share.…
…
…
…
8,289
7,862
After the balance sheet date an ordinary dividend of 115p per qualifying ordinary share was proposed by the
Directors (2022: Ordinary dividend of 107.80p).
The proposed current year ordinary dividend of £8,636,000 has not been provided for within these financial
statements (2022: Proposed ordinary dividend of £8,289,000 was not provided for).
C18
Accounting estimates and judgements
The material accounting estimates and judgements for the Company follow that of the Group which have been
considered in note 2 of the Group financial statements.
C19
Share-based payment transactions
Details of the equity-settled share-based payment transactions are disclosed in note 35 of the Group financial
statements.
103
NOTES TO THE FINANCIAL STATEMENTS
Alternative performance measures
Measure
Method of calculation / reference
Page No.
2023
2022
Gross profit (£’000)
Consolidated statement of profit or loss
48
46,221
42,704
Revenue (£’000)
Consolidated statement of profit or loss
48
185,742
144,108
Gross profit as percentage of
revenue (%)
Gross profit / revenue
24.9%
29.6%
Profit before tax (£’000)
Consolidated statement of profit or loss
48
22,129
19,941
Unrealised gain on 10 year
interest rate swap derivative
Consolidated statement of profit or loss
48
(3,189)
(2,740)
Trading profit (£’000)
18,940
17,201
Operating profit (£’000)
Consolidated statement of profit or loss
48
20,313
18,307
Capital employed (£’000)
Note 28 (d)
86
157,569
145,095
Return on capital employed (%)
Operating profit / capital employed
12.9%
12.6%
Net debt (£’000)
Note 28 (d)
86
32,822
29,785
Net assets attributable to equity
holders of the parent (£’000)
Consolidated balance sheet
52
124,747
115,310
Gearing (%)
Net debt / equity, as above
26.3%
25.8%
Net profit attributable to equity
holders of the parent (£’000)
Consolidated statement of profit or loss
48
15,904
12,980
Net assets attributable to equity
holders of the parent (£’000)
Consolidated balance sheet
52
124,747
115,310
Return on investment (%)
Net profit / net assets
12.7%
11.3%
Revenue (£’000)
Consolidated statement of profit or loss
48
185,742
144,108
Average number of employees
Note 6
67
1,144
1,112
Sales per employee (£’000)
Group revenue / average employees
162,362
129,594
Annual post tax profit (£’000)
Consolidated statement of profit or loss
48
16,513
13,620
Interest rate swap mark to market
net of tax @ 19.49% (2022: 19%) (£’000)
Consolidated statement of profit or loss
48
(2,576)
(2,219)
Deferred tax rate change (£’000)
Note 8
68
-
2,012
Deferred tax rate difference (£’000)
Note 8
68
596
-
Depreciation owned assets (£’000)
Note 5
67
6,272
6,202
Depreciation right-of-use assets (£’000)
Note 5
67
1,198
1,192
Amortisation and impairment (£’000)
Note 5
67
1,257
1,572
Exclude operating
lease depreciation (£’000)
(538)
(508)
Annual post tax profit +
depreciation + amortisation (£’000)
22,731
21,871
104
FIVE YEAR FINANCIAL SUMMARY
Continuing operations
2019
2020
2021
2022
2023
£’000
£’000
£’000
£’000
£’000
Revenue…
…
…
…
…
…
…
…
127,046
144,512
131,231
144,108
185,742
Trading profit …
…
…
…
…
…
…
16,410
12,115
16,514
17,201
18,940
Profit before taxation
…
…
…
…
…
16,410
12,115
16,514
19,941
22,129
Tax on profit
…
…
…
…
…
…
…
(3,963)
(3,775)
(3,508)
(6,321)
(5,616)
Profit after taxation …
…
…
…
…
…
12,447
8,340
13,006
13,620
16,513
Basic earnings per ordinary share (in pence) …
…
159.79p
107.93p
167.82p
169.14p
206.81p
Diluted earnings per ordinary share (in pence)
…
159.79p
103.31p
164.23p
169.14p
206.81p
Total equity
…
…
…
…
…
…
…
109,291
109,602
118,028
119,743
129,157
Trading profit is defined as profit before tax, less the impact of the interest rate swap valuation. The calculation is reported in
the Alternative Performance Measures on page 104.
105